The decapitated bodies of the soldiers lined a major boulevard, accompanied by a sign: "For every one of mine that you kill, I will kill 10." A bag of their heads, some still gagged with tape, was found nearby.
The discovery in Chilpancingo, an hour north of the resort of Acapulco in southern Mexico, marked the most gruesome attack yet against the Mexican army in its half-century battle against drug gangs.
The government honored the dead Monday in a high-profile ceremony aimed at reassuring the nation that it won't surrender, despite escalating violence that has killed 5,300 people this year and the betrayal of more than a dozen top law enforcement officials accused of accepting money to protect cartels.
U.S. giving $400 million in aid
The beheadings also came as Mexico prepares to use $400 million in U.S. aid to fortify its war on traffickers.
President Felipe Calderon said the attack shows that his government's crackdown is putting pressure on the cartels, and he promised "firm action" in response.
"We are well aware that these cowardly assassins are trying to terrorize the state and society," Calderon said at a speech in Mexico City. "We will not take one step back in this fight nor will there be any deal nor mercy for the country's clear enemies."
Calderon didn't attend the memorial, but his defense and interior secretaries stood before flag-draped coffins at the army base in Chilpancingo.
Regional military commander Gen. Enrique Alonso Garrido said the beheadings were an "offense against Mexican institutions and especially against those who wear a military uniform."
"These criminals made a grave error with this audacious act," he said. "There will be no concessions, and what's more, we will not rest until we have put them in their place."
Authorities found 12 decapitated bodies Sunday in and around Chilpancingo, the capital of the violent state of Guerrero. So far, officials have identified seven as soldiers but haven't given information on the rest of the dead. Another decapitated soldier was found Dec. 9.
Mexico's Defense Department has refused to release details on how the soldiers were seized or which cartel is suspected of carrying out the killings.
Mexico has often turned to the army to battle drugs since sending troops in a "great campaign" to wipe out drug plantations in 1948. Soldiers have grown ever more involved in tackling narcotics since then, largely due to corruption among police forces.
Calderon has accelerated the militarization since taking office in 2006, deploying as many as 45,000 soldiers to battle smugglers.
Unprecedented violence
Gangs who once avoided confrontations with the army have responded with unprecedented violence, launching ever-bolder and bloodier killings, targeting not only rivals but police and soldiers on a nearly daily basis.
Sunday's discovery, however, was the largest group of soldiers beheaded at once. Shannon O'Neil, a Latin American expert at the Center on Foreign Relations, said the killings are troubling but not unexpected as the country's drug battle escalates.
"For Mexico, ultimately its success will be to make this a criminal problem instead of a threat to the state," she said.
The slayings were the latest blow to Calderon's crackdown on the drug trade. He also is in the middle of his most sweeping attempt to weed out corruption.
Several high-ranking police and prosecution officials have been detained for allegedly aiding the country's most powerful gang, the Sinaloa cartel. Among them are Noe Ramirez, Mexico's former drug czar, and Gerardo Garay, the former acting federal police chief.
U.S. lawmakers have conditioned 15 percent of the $400 million in anti-drug aid on Mexico's efforts to clean up its police force. The money is earmarked for training and equipment.