8 February 2014
Last updated at 15:49 ET
The vigilantes have set up roadblocks on the access routes to the city
Hundreds of vigilantes, backed up by armoured vehicles and troops, arrived in Apatzingan on Saturday.
They have also set up roadblocks around the city, in western Mexico.
The cartel controls much of the drug trafficking in the area and is known to extort money from local farmers and businesses.
Vigilante leaders, who have joined the official security forces, and the army say they will begin searching house by house for the leaders of the Knights Templar.
In the beginning of January, the "self-defence groups" launched an offensive against the Knights Templar gang, taking over several municipalities in Michoacan.
On 11 January, they also occupied the central square of Apatzingan, where the cartel's command is based.
But there were reprisals, with arson attacks against local businesses.
This time the vigilantes returned to the city ostensibly unarmed, albeit supported by Mexican army troops.
They walked unchallenged into the centre of Apatzingan. The operation began just before 11:00 local time (17:00 GMT).
Local reports say checkpoints have been set up along several access routes to the city.
'No further delay'
Mexico vigilantes enter Knights Templar cartel stronghold
The vigilantes have set up roadblocks on the access routes to the city
Vigilante
groups in the troubled Mexican state of Michoacan have entered a
stronghold of the Knights Templar drug cartel, occupying the main
square.
They have also set up roadblocks around the city, in western Mexico.
The cartel controls much of the drug trafficking in the area and is known to extort money from local farmers and businesses.
Vigilante leaders, who have joined the official security forces, and the army say they will begin searching house by house for the leaders of the Knights Templar.
In the beginning of January, the "self-defence groups" launched an offensive against the Knights Templar gang, taking over several municipalities in Michoacan.
On 11 January, they also occupied the central square of Apatzingan, where the cartel's command is based.
But there were reprisals, with arson attacks against local businesses.
This time the vigilantes returned to the city ostensibly unarmed, albeit supported by Mexican army troops.
They walked unchallenged into the centre of Apatzingan. The operation began just before 11:00 local time (17:00 GMT).
Local reports say checkpoints have been set up along several access routes to the city.
Mexican troops were first deployed in Apatzingan nearly a month ago
The strategy has been agreed between the vigilante leaders,
army and police officers and President Enrique Pena Nieto's envoy to
Michoacan, Alfredo Castillo.
On Friday, one of the vigilante leaders, Hipolito Mora, said the occupation could not be delayed any longer.
"We need to enter Apatzingan, which is the heart of the whole region and, as we all know, of vital importance for the criminal organisation," said Mr Mora.
"There can't be any further delay, as that would put under risk the lives of so many people who are supporting our movement," he added.
On Thursday, Mexican police found a mass grave with some 20 bodies in the town of Tinguindin.
Hours earlier, four severed bodies in plastic bags were found in the nearby village of Zacan, also in Michoacan. They were left outside the local church, accompanied by a threatening note.
A spokesman for the vigilante groups said the killings were probably a revenge attack carried out by the drug cartel.
The Knights Templar cartel has accused the vigilantes of
working as a proxy army for the New Generation cartel, from neighbouring
Jalisco state.
The two rival organisations have been fighting a turf war for control of criminal activities in Michoacan and Jalisco.
The vigilantes have fiercely denied any involvement with the New Generation cartel.
They say they have taken matters into their own hands as the Mexican government has failed to guarantee the security of their families.
On Friday, one of the vigilante leaders, Hipolito Mora, said the occupation could not be delayed any longer.
"We need to enter Apatzingan, which is the heart of the whole region and, as we all know, of vital importance for the criminal organisation," said Mr Mora.
"There can't be any further delay, as that would put under risk the lives of so many people who are supporting our movement," he added.
On Thursday, Mexican police found a mass grave with some 20 bodies in the town of Tinguindin.
Hours earlier, four severed bodies in plastic bags were found in the nearby village of Zacan, also in Michoacan. They were left outside the local church, accompanied by a threatening note.
A spokesman for the vigilante groups said the killings were probably a revenge attack carried out by the drug cartel.
The army has been guarding the Apatzingan's city council
The two rival organisations have been fighting a turf war for control of criminal activities in Michoacan and Jalisco.
The vigilantes have fiercely denied any involvement with the New Generation cartel.
They say they have taken matters into their own hands as the Mexican government has failed to guarantee the security of their families.
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