Curacao/ˈkjʊrəsəʊ/ Definition 1 of 2Pro Tip 1/3Color Variations Curacao liquor comes in various colors; blue is very popular in drinks. The Blue Lagoon is made with blue curacao. Pro Tip 2/3Cocktail Ingredient Often used in cocktails to add flavor and color; not usually consumed straight. She enjoyed a margarita with a splash of curacao. Pro Tip 3/3Dessert Connection Curacao can be found in dessert recipes, particularly in syrups and icing. The cake had a curacao-infused icing that was delightful.