The US has been sending unarmed drones over Mexico since February to gather intelligence on major drug cartels, the New York Times reports.
Useful information has already been turned over to Mexican authorities, US officials told the paper.
The missions had been kept secret because of Mexican legal restraints and sensitivities over sovereignty.
Mexico's northern border areas have seen much of the violence that has left more than 34,000 dead since late 2006.
The New York Times reports that the Obama administration began sending high-altitude, unarmed drones over Mexican territory in February, aiming to collect information to turn over to Mexican law enforcement agencies.
The paper quotes both American and Mexican officials as saying that Mexico had asked the US to use its drones to track suspects' movements.
Unnamed US officials said drones had gathered intelligence that led to the arrest in Mexico of several suspects in connection with the murder of a US immigration agent, Jaime Zapata.
US President Barack Obama and his Mexican counterpart, Felipe Calderon, formally agreed to continue the surveillance flights during talks in Washington on 3 March, which included a frank exchange of grievances, Mexican and US officials said.
In state department cables released by Wikileaks and published by The Guardian newspaper last December, the US ambassador to Mexico, Carlos Pascual, painted an unflattering portrait of the Mexican security forces, and questioned whether President Calderon could win his war on drugs.
Foreign military and law enforcement agents can only operate in Mexico under extremely limited conditions, according to the Mexican constitution.
"It wasn't that long ago when there was no way the DEA (Drug Enforcement Administration) could conduct the kinds of activities they are doing now," former DEA international operations chief Mike Vigil told the New York Times.
"And the only way they're going to be able to keep doing them is by allowing Mexico to have plausible deniability."
But the rising violence in Mexico has seen the US and Mexico deepen their co-operation to tackle a common threat, officials from both countries told the paper.