The bodies of 11 men and one woman working for the federal police were found stacked together on Tuesday, bearing signs of torture, police said.
Officials earlier suggested the killings might be linked to the powerful La Familia, which operates in the region and is considered one of the most violent criminal gangs in Mexico.
Recently, La Familia launched a series of attacks against police posts in Michoacan that left four people dead, including three members of the security forces and one suspected cartel hit man.
Felipe Calderon, the Mexican president, who has waged a major crackdown on the drug cartels in Mexico, called those attacks "desperate and violent reactions".
Michoacan - Calderon's home state - has also seen violent clashes between rival drug cartels.
La Familia, which operates mainly in Michoacan, burst into the headlines in October 2006 when an armed commando linked to the cartel entered a bar and tossed five severed heads onto the dance floor.
Edgardo Buscaglia, director of the International Law and Economics of Development Centre at the University of Virginia, USA, said Calderon's policies were not working, given the dramatic rise in murders related to organised crime.
"It makes no sense to say that the policies are working when homicides related to organised crime have gone up from 1,500 in 2006 to more than 6,000 last year," he told Al Jazeera recently.
Relying on force
Buscaglia faulted the Mexican leader for relying on force - soldiers and police- to engage organised crime.
Calderon has deployed 36,000 soldiers and federal police to the cities most affected by drug violence.
"You need to dismantle the huge economic network - thousands of millions of dollars hidden within the legal economy of Mexico, Guatemala, Honduras, Ecuador, Venezuela that have been strengthening organised crime in Mexico," Buscaglia said.
More than 7,700 people have been killed in drug violence in Mexico since 2008, according to government figures.