This is another Navy term that has made its way into our every day life. When a person finally does something that lets you know what he is really like you say he has shown his true colors. Kodak even used a form of this in their advertising, Let your true colors come shining through” Also a Cindy Lauper song for us 1980’s rejects.

Early warships often carried flags from many nations on board in order to elude or deceive the enemy. The rules of civilized warfare called for all ships to hoist their true national ensigns before firing a shot. Someone who finally "shows his true colors" is acting like a man-of-war which hailed another ship flying one flag, but then hoisted their own when they got in firing range.

This was a ruse that many a sea captain used to get closer to his target. Pirates used this as standard practice then at the last moment ran up the Jolly Rodger. Even Captain Hornblower used this trick on his many adventures, so it must not be all that bad.