Most of the goods were seized at customs for violations of import rules.But the bulk of the jewellery came from drug traffickers, an official said.
The auction, divided into 590 lots and spread over Thursday and Friday, aims to sell some 12m items.'Narco-bling'
One of the first items sold, an Audemars Piguet gold watch, fetched almost $70,000 (£44,000).But a 14-carat diamond, with an estimated value of more than £62,500, failed to sell.Other items include two helicopters, three executive jets, and dozens of vehicles.
There are also some more affordable items, such as furniture, toys, computers and printers.Other goods on the list are gifts to Mexican officials that exceeded the permitted value that public employees are allowed to receive, among them cases of fine wine, rum and whisky.
The annual event, organised by the Asset Administration and Disposal Service (SAE), is open to the public.The authorities hope to raise some £3.7m from the sale.The money raised will go towards funding the fight against crime as well as programmes tackling drug addiction.
Mexican drug gang leaders are renowned for their love of "narco-bling", including jewel-encrusted and gold-plated weapons.
One of the ways the drug cartels launder money is by buying expensive goods with cash, making the purchases hard to trace.
Drug-related violence has led to the deaths of some 30,000 people in Mexico since December 2006.
This ring with an 18 carat gold band and diamonds
is among the star item