Into the middle of this drama stepped America's top government official in the region—John Fremont. Passing through the Sacramento area in June 1846, Fremont decided it was time for America to take California—and he authorized an overthrow of the Mexican government. In reality, Mexico had very few resources in California, and the takeover required little more than knocking on the door of Mexican General Mariano Vallejo, and asking him to surrender. Vallejo was enthusiastic about the idea. He offered everyone a round of brandy--and asked the Americans if he could join them. Fremont responded by putting Vallejo in jail at Sutter’s Fort.
Conquerors like to raise flags, and Fremont and his associates were no exception (See above). The animal in the middle that resembles a pig--is actually a bear. Thus this victory came to be called the Bear Flag Revolt. The man who designed the flag was William Todd—the nephew of Abraham Lincoln. It's not clear how Todd got the job, since his artistic ability seems indistinguishable from that of a 2nd grader. Nonetheless, a bear remains on the California flag to this day.... although more-gifted artists have since re-imagined a bear that looks more, well... bear-like.
It's worth noting that the original Bear Flag was destroyed, but accurate sketches and other documentation were gathered to create our reproduction. You can see a bigger version of our flag here. (Updated. Thanks Judah!)