At least 200 state and federal security forces were called in to stop the fighting and guard the estimated 2,500 inmates, who set fire to a warehouse.
Television footage showed police officers in bulletproof vests storming the prison while crowds gathered outside.
Television images also showed machine gun-toting police on top of the prison amid large plumes of black smoke.
Prison mutinies are common in Mexico, where jails are usually overcrowded and in poor condition.
Since the beginning of this year, 15 prisoners have been killed in fights at the Gomez Palacio jail.