Prisoners fought each other with handguns and knives, which were seized after the fight, the state's Public Security Ministry said.
"On Tuesday afternoon a fight occurred inside the Regional Center for Social Reinsertion, which left a toll of 16 inmates dead, as well as five more wounded," the ministry said in a statement.
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Authorities later arrested a prisoner with a firearm. "Three other handguns were found, as well as knives, with which the homicides were allegedly perpetrated," the statement said.
The ministry said a search was conducted to ensure no more weapons remained in the facility.
The prison in the town of Cieneguillas and another in the nearby town of Fresnillo had been searched as recently as last weekend, the authorities acknowledged.
The statement said that as of late Tuesday, "the situation in the penal complex is under control."
The authorities said an investigation of the incident was under way, and the victims were being identified.
Frequent disturbances in Mexican prisons have been blamed on overcrowding and the presence of organised crime gangs.
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A prison riot in October in the central state of Morelos left six dead, including the head of the powerful Jalisco New Generation cartel.
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