Star wearing cap at centre of Mexican wave (7)
I believe the answer is:
tsunami
'wave' is the definition.
(tsunami is a kind of wave)
'star wearing cap at centre of mexican' is the wordplay.
'star' becomes 'sun' (Sun is an example).
'wearing' indicates putting letters inside.
'cap' becomes 'tam' (tam is a kind of cap**).
'at centre of' indicates the central letters.
The central letter of 'mexican' is 'i'.
'sun' inserted inside 'tam' is 'tsunam'.
'tsunam'+'i'='TSUNAMI'
(Other definitions for tsunami that I've seen before include "Great, fast-moving sea wave" , "stormy sea" , "Large ocean wave" , "Freak wave" , "Huge wave caused by earth tremor" .)