The massacre took place when federal officers, along with a Black Hawk helicopter, stormed a ranch where alleged members Jalisco New Generation Cartel were hiding.
A total of 42 suspects and one police officer were killed in the raid , according to government's National Human Rights Commission.
Family members and forensic experts believe some were gunned down as they tried to escape.
Most appear to have been sleeping on a verandah and then scattered when the police showed up.
Raul Gonzalez, the president of the CNDH, said police lied about their role during the incident, moved seven bodies and shifted weapons to manipulate the scene.
Police tortured two people they arrested, and burned two bodies, Gonzalez added.
He said: "We established facts that imply grave human rights violations attributable to public servants of the federal police.
The ambush took place near the small town of Tanhuato in the violent western state of Michoacan.