President Vicente Fox said the Bell helicopter was carrying Public Safety Secretary Ramon Martin Huerta — a trusted Fox ally whose ministry heads the federal police — Federal Preventive Police Chief Tomas Valencia, five other passengers and a crew of two.
It had taken off from a military base in Mexico City and was headed to a ceremony at the maximum-security La Palma prison, 35 miles west of Mexico City, when it was crashed in dense clouds.
"They all died in the line of duty," Fox said in a televised address.
Rescuers had spent hours searching the sparsely populated forests outside Mexico City for the helicopter.
"We are probably looking at an accident," Interior Secretary Carlos Abascal told reporters before the helicopters wreckage was discovered.
Mexican media began speculating within hours of the helicopter's disappearance about the possible involvement of drug trafficking groups.
The helicopter was on its way to a swearing-in ceremony for prison guards, the culmination of an effort to purge corrupt officials from a prison holding notorious Mexican drug gang leaders.
The prison was cordoned off earlier this year by federal troops after investigators found evidence that reputed drug lords Osiel Cardenas and Benjamin Arellano Felix had joined forces and were operating their networks from behind bars.
Fox created the Public Safety Department after taking office in 2000, combining federal police forces overseeing prisons, highways and borders — including the Federal Preventative Police.
A key Fox ally, Huerta was appointed to lead the agency in August 2004 after the previous secretary, Alejandro Gertz Manero, resigned to return to private life.
Valencia had been promoted to his police chief post, answering to Huerta, in January after his predecessor was fired for his role in the botched response to an attack by a mob in Mexico City that left two federal agents dead.
Huerta was Fox's campaign director when Fox ran for governor of the central Mexican state of Guanajuato, and served as interior secretary after Fox's election in 1995. When Fox became president, Huerta took over as interim governor of Guanajuato.
Huerta, who has a degree in business administration, worked as a college professor and was an activist in Fox's conservative National Action Party before he launched his government career.