Nearly 55,000 chickens were slaughtered at a farm in the central state of Puebla, a communication from Mexico's agriculture department said.
The Senasica food-safety agency ordered the birds sacrificed after laboratory tests confirmed the presence of the H7 virus at the farm in Palmar de Bravo.
Senasica suspects the virus was spread to Puebla by chickens from other Mexican states affected by the avian-flu outbreak that began in 2012, the department said.
Once the 55,000 birds were slaughtered, authorities set about cleaning and disinfecting the farm.
Senasica inspectors found no sign of avian flu at 271 other chicken farms in Puebla, the agriculture department said.
Besides distributing millions of doses of vaccine, authorities have imposed controls on movements of chickens and boosting precautions at commercial farms, the department said.
Nearly 1,000 chickens were slaughtered at the end of last month in Tlaxcala state, bordering Puebla, to contain the bird-flu virus, following the sacrifice in February of 4 million birds in the central state of Guanajuato.
The outbreak was first detected last year in the western state of Jalisco, where more than 22 million chickens were ultimately slaughtered.