Mexico's navy seized 45 pounds of powerful explosives Wednesday in a residential neighborhood in the capital after an exchange of information with U.S. authorities.
Four Mexicans suspected of links to organized crime were being questioned after a pre-dawn raid on a hostel in Mexico City's Roma neighborhood, the navy said in a prepared statement.
Officials said the explosives were the type used in demolition that could be applied directly to structures.
Investigators declined to say whether the explosives were linked to drug traffickers, but federal authorities have said they recently intercepted communications revealing that cartel gunmen were seeking explosives for attacks, possibly on buildings or along roads.
Mexico City has so far avoided most of the drug-related violence that has claimed nearly 23,000 lives since President Felipe Calderón launched an offensive against traffickers in late 2006.
The hostel where the explosives were found is several blocks from city police headquarters, target of a failed 2008 bomb plot against a Mexico City police commander. That plot was traced to Sinaloa state, a major drug cartel base. A person carrying the bomb died in the attack.
Also Wednesday, eight drug traffickers with ties to the Beltrán Leyva cartel were killed after attacking marines in the nearby state of Colima.
Five marines were injured, and one was in critical condition, the navy said.
Several grenades and high-powered weapons were confiscated.