We present a two-layer hidden Markov model to detect the structure of haplotypes for unrelated individuals. This allows us to model two scales of linkage disequilibrium (one within a group of haplotypes and one between groups), thereby taking advantage of rich haplotype information to infer local ancestry of admixed individuals. Our method outperforms competing state-of-the-art methods, particularly for regions of small ancestral track lengths. Applying our method to Mexican samples in HapMap3, we found two regions on chromosomes 6 and 8 that show significant departure of local ancestry from the genome-wide average. A software package implementing the methods described in this article is freely available at http://bcm.edu/cnrc/mcmcmc.