Mexico offered a reward of $2.4 million for information leading to the arrest of armed men who torched a casino, leaving 52 people to burn and choke to death in a blazing inferno.
The particularly callous attack on Thursday shocked a nation already used to grim murders and high tolls in a drug war that has claimed more than 41,000 lives since a military crackdown began in 2006.
Addressing the nation from his official Los Pinos residence, President Felipe Calderon condemned the "abhorrent and barbaric" assault, declared three days of national mourning, and vowed the drug gangs would never win.
He also hit out at the United States, a key ally, saying that the authorities across the border to the north must do something about the seemingly endless US appetite for drugs that is ruining much of South America.
"I ask them to reflect on this tragedy that we are living through in Mexico and many other Latin American countries. We are neighbors, allies, friends, but you are also responsible," Calderon said.
US President Barack Obama and Secretary of State Hillary Clinton were quick to condemn the attack, hail Mexico's efforts to combat the drugs trade and pledge renewed American support.
"The people of Mexico and their government are engaged in a brave fight to disrupt violent transnational criminal organizations that threaten both Mexico and the United States," Obama said.
"The United States is and will remain a partner in this fight."
In Thursday's attack, armed men, believed to be from either the Zetas or Gulf cartel, emptied cans of gasoline and set fire to the Casino Royale in the northeastern city of Monterrey, a flashpoint in their brutal turf war.
Trapped as the vast building went up in flames, victims hid in bathrooms and offices instead of heading to the emergency exits. Many died of smoke inhalation in the ensuing panic, unable to escape. Ten people were injured.
"It is evident that we are not faced with ordinary delinquents but by actual terrorists who know no boundaries," said Calderon, describing it as the most serious attack Mexican civilians had endured in a long time.
"The gunmen are not and cannot be the masters of our streets. We must confront them and stop them," the president said.
Calderon ordered police and army reinforcements to Monterrey, while the justice ministry offered 30 million pesos ($2.4 million) for information leading to the arrest of the perpetrators.
Former president Vicente Fox on Friday meanwhile proposed calling for a truce for drug traffickers, and perhaps even an amnesty for them in order to stop the violence.
"The facts tell us that we cannot fight violence with violence," Fox said.
The Zetas are believed to have come into existence in the 1990s, founded by deserters from the Mexican special forces hired as hitmen for the powerful Gulf cartel.
They later split from the Gulf cartel, sparking increasingly violent turf wars as they set up their own trafficking operations.
Monterrey, until recently a peaceful industrial city, has become the epicenter of a battle between the Zetas and their former employers as they vie for control of lucrative drug-smuggling routes to the United States.
Mexico's third largest city, which is home to four million people, has seen an increasing amount of drug-related violence with more than 70 murders last month alone.
Casinos have been particularly targeted as owners refuse to pay protection money demanded by criminal gangs.
This type of casino was popular with "women and old people and the criminals knew that," a security guard told AFP in front of the burned-out building.
Among the dead were 31 women and eight men, according to an updated official list. The sex of several victims was still to be determined as forensic experts sifted grimly through charred remains.
Footage from security cameras shows eight or nine armed men arriving in cars at around 4:00 pm (2100 GMT) and carrying cans of liquid. They can be seen rushing out and speeding away a few minutes later, the building ablaze.
One witness, who escaped with a friend to the rooftop of the sprawling casino building, gave an account to local media.
They entered the casino "and screamed "˜everyone hit the floor,'" the witness said, speaking on condition of anonymity, adding that "an impressive explosion followed -- I never want to go through something like that again."
Firefighters had to knock large holes in the building's walls to reach the second floor. It took them four hours to extinguish the blaze.