No arrests were immediately made after the assault in the town of Uruapan in western Michoacan state, which is situated along a Pacific coast drug trafficking route to the United States.
Police set up checkpoints around the city, the state government said.
Local media said the people shot had been mourning the death of a young man whose body was found in a park earlier Wednesday.
Michoacan used to be the turf of a powerful drug cartel called the Caballeros Templarios and is now a theater of operations for smaller drug trafficking cells.
The drug trade, battles between cartels, and government efforts to end trafficking have exacted a horrible toll.
Mexico saw a total of 15,973 murders in the first semester of this year, up from 13,503 over the same period in 2017, until now the bloodiest year of record, according to official figures.
Drug related violence has claimed more than 200,000 lives since 2006, when the government called in the military to fight the cartels.
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