Taking a bite of fresh chile might not lead the eater to guess that chiles are in the same botanical family as potatoes, eggplants, and tomatoes. Chiles contain capsaicin, an oil that tricks the brain into feeling pain, which leads to the release of endorphins—causing what chile-lovers call a "chile high." To reduce the amount of heat in chiles, remove the white-ish veins, where the capsaicin is most highly concentrated, and the seeds, the secondary location of capsaicin.
Look for these fresh chiles at specialty markets and some farmers markets in warmer areas. Hot chiles need hot air to grow and develop their heat.
Jalapeños might be the best-known hot chiles in the U.S. They are smooth, green, shiny, and plump looking. They were once famous for their heat, although higher demand for the commercial crop to make salsas (and jalapeño poppers!) has led to jalapeños bred for wider, less daring consumption. Plenty of jalapeños still pack a punch, though, and those in doubt can always go for serrano chiles, since they have a very similar green, grassy flavor under all that heat.
Jalapeños ripen to red and red jalapeños can sometimes be found for sale. Many chiles labeled "red jalapeños" are, however, really Fresno chiles.
When allowed to ripen to red, jalapeños are often dried and smoked, at which point they are called chipotles.
Fresno chiles are about the same size as jalapeños, but they are slightly more bell shaped and are a truly bright red. As such, they are often sold as "red jalapeños" since they have a similar heat profile. Fresno chiles are great to use for their vivid color as much as for their flavor, especially when mixed into with earthier green colors.
Serrano chiles are shiny green, slim, and narrow. Like jalapeños, they have a herb-y even grass-like flavor; they are usually quite a bit hotter than jalapeños, however. They work beautifully in salsas and guacamoles for those who like things hot.
Habaneros are widely known as the hottest chiles out there, even though Scotch Bonnet chiles, which look almost identical, give them a run for their money. Both start out green and turn yellow, then a brilliant bright sunny orange, and finally red when ripe. Habaneros are primarily grown in the Yucatan peninsula of Mexico, where they are used extensively.
People who love shocking heat can use habaneros in chiles and marinades; most palates will find even a small amout of habanero to be quite hot. They are worth seeking out and trying, however, because they have an amazingly perfumed taste that is more complex than other chiles.
New Mexico or Anaheim Chiles
These long, slim chiles are known as either Anaheim chiles or, especially when from the state, New Mexico chiles. Their heat level varies tremendously, from quite mild to very hot. They are fresh and green or dried and red.
Poblano chiles are large (about the size of a child's hand), bell or even heart shaped, and often slightly flat. They are very dark green and shiny. They can be hot, but are usually relatively mild and good for stuffing (as in these Beef Stuffed Chiles). Poblanos are quite bitter when raw, but turn noticably sweeter when roasted.
When allowed to ripen to red and dried, poblano chiles become ancho chiles.
Bird's Eye Chiles
These teeny bright red chiles are common in Southeast Asian cooking and pack a tremednous amount of heat into a thumbnail-size chile.
These famously yellow chiles are essential to Peruvian cuisine. Besides their sunny yellow color, they bring a wonderfully complex aroma to foods. Fresh aji amarillos are rarely available in the U.S., but canned versions can be found in Latin American and South American markets.