Officials said they found six executed kidnapping victims inside a Tijuana house following a three-hour shootout between gunmen and soldiers and police.
The victims, all male, were blindfolded and had been shot execution-style in the head, said Edgar Millan, a spokesman with the federal Public Safety Department.
One kidnapping suspect was also killed in the gun war. Five police agents were wounded and four suspects taken into custody. Authorities said two of the kidnapping suspects are police officers.
Soldiers, state and local police were sent in to help control the firefight that began when federal agents prepared to raid a house near the U.S. border that police now say was a shelter for a cell of the Arellano Felix drug cartel.
Three nearby schools were evacuated, and police were running with small children in their arms while shots rang out. More than 100 children were escorted at gunpoint out of their preschool by armed guards, following the gun battle in the Ermita neighborhood.
One of the captured gunmen is a state police investigator and another a Tijuana police officer, Millan said. The four suspects will be flown to Mexico City for questioning.
Millan said officials recovered 11 automatic rifles and three bulletproof vests inside the house.
Already this week, gunmen shot and killed eight people in Tijuana, including two local police officers, as well as a district commander, his wife and his 12-year-old daughter.
Also Thursday, employees at Tijuana's City Hall and police headquarters were evacuated after receiving death threats over a police radio frequency, said Abraham Sarabia, a spokesman for city police.
Mexico has seen a spike in gang-related killings since the beginning of the year. The Mexican government has described the violence as revenge for President Felipe Calderon's year-old crackdown on organized crime that sent thousands of soldiers and federal police into violence-plagued cities nationwide.