Some 40,000 troops are battling the drug gangs nationwide
A reward of $2m (£1.37m) each will be paid to informers who help arrest Mexico's 24 most-wanted drug gang chiefs, the attorney general has said.
Correspondents say the most-wanted list is a public challenge to the cartels.
Some 8,000 people have died in the past two years, as drug gangs fight for territory amid government crackdowns.
US and Mexican agencies are increasing their co-operation as the gang violence spills over the border, where kidnaps and killings are on the rise.
The reward offer comes two days before a trip to Mexico by US Secretary of State Hillary Clinton, and a month before President Barack Obama is due to visit.
On Tuesday, the Obama administration announced plans to deploy more agents and equipment along the border with Mexico to tackle the increase in drug-trafficking and related violence.
The BBC's Stephen Gibbs in Mexico City says that with some evidence that drug violence is crossing the border, both governments have been are under pressure to find a more co-ordinated policy to undermine the immensely powerful Mexican cartels.
The BBC's Matthew Price reports from Juarez, Mexico, on the drug violence
The drug gangs have splintered into six main cartels, under pressure from law enforcement action on both sides of the border, according to the attorney general's office in Mexico.
For example, one gang once affiliated with the Sinaloa group under the Pacific cartel alliance was now listed as its own cartel the Beltran Leyva organisation.
Another gang, La Familia, which operates in central Mexico and was previously believed to answered to the Gulf cartel, is now listed as a separate group.
Among the men on the most-wanted list are the alleged head of the powerful Sinaloa cartel, Joaquin "El Chapo" or Shorty Guzman, who gained recent additional notoriety after being named by Forbes magazine as one of the world's billionaires.
Others on the most wanted list are the suspected heads of the La Familia and Los Zetas criminal groups.
Some of the men, such as Guzman and Ismael Zambada, allegedly of the Pacific cartel, are also targeted by separate $5m (£3.43m) bounties from the US government.
The Mexican announcement offers "up to 30m pesos ($2m) to whomever provides information that is useful, true and leads to the location and arrest" of the listed traffickers.
While Mexico has offered rewards for the capture of drug lords in the past, this is the first concerted offer for all the most-wanted cartel members at once.
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