The mass killing is one of the worst since the end of Guatemala's 36-year civil war in 1996

Gunmen have killed at least 27 people - decapitating most of the victims - in a Guatemalan village near the border with Mexico in one of the worst mass killings in a generation, local police said.

The killing of the 25 men and two women took place early on Sunday in the town of Caserio La Bomba in Peten province near the Mexico border, Donald Gonzalez, a National Civil Police spokesman, said.

"This is the worst massacre we have seen in modern times," Gonzalez said.

Police said the slayings could be linked to the killing on Saturday of 56-year-old Haroldo Waldemar Leon, the brother of suspected drug trafficker Juan Jose Leon, who was gunned down in a rural area of northern Guatemala.

Juan Jose Leon was wanted by the US Drug Enforcement Administration, but was killed in 2008. Police linked Juan Jose Leon's killing to the powerful Mexican drug cartel, Las Zetas.

Guatemala's northern border is an active drug transfer point for cocaine moving north mainly the US from South America.

Authorities said police and soldiers were searching the area on Sunday for the unidentified attackers and did not offer a motive for the attack.

Drug war

"This is a terrible event that we must clarify and investigate regardless of the consequences, whoever is the author of this massacre," Claudia Paz y Paz, Guatemala's prosecutor general, said.

In February, the government lifted a two-month-long state of siege that it had declared in Alta Verapaz province, which neighbours Peten province, during which security forces were sent to quell drug-related violence.

The state of siege gave the army emergency powers - including permission to detain suspects without warrants - and resulted in the arrest of at least 20 suspected members of the Zetas gang.

The Zetas are a group of ex-soldiers who began as hit men for Mexico's Gulf drug cartel before breaking off on their own, quickly becoming one of Mexico's most violent gangs and spreading a reign of terror into Central America.