The peasants held the town hall for about 13 hours Tuesday before being driven out by police firing tear gas and bullets.
Residents said the protesters fled to a nearby church and returned fire before leaving town.
Government helicopters flew overhead and about 150 armed and helmeted state police had the area surrounded.
The confrontation was the most violent of several demonstrations staged by mainly Indian protesters Tuesday to demand that Mexico's government recognize Amado Avendano, a failed opposition candidate for Chiapas governor.
Avendano claims he was cheated out of an Aug. 21 election victory through vote fraud.
The incidents also marked a resurgence of tension in Chiapas, where a year-old rebellion by the Zapatista National Liberation Army still smolders despite recent peace overtures.
About 25 kilometers east, some 300 protesters took over the town hall of Frontera Comalapa. Police used tear gas to try to dislodge them but reports from the Fray Bartolome de las Casas Human Rights Center, in San Cristobal de las Casas, said the protesters were still in control of the building.
Other protesters, armed with machetes and sticks, barricaded the highway 32 kilometers southeast of San Cristobal de las Casas on a major route to the southern Chiapas city of Comitan.
Opposition activist Cesar Espinosa said police provoked the violence in Chicomuselo. "The town hall takeover was to have been peaceful. But the police had already been alerted and fired on the demonstrators," Espinosa said.
Two protest leaders, belonging to a peasant organization backing Avendano, were shot dead by local police when they and 300 followers stormed the building at about 1 A.M. Tuesday.
Police chief Hernan Sepulveda Fernandez was hanged by his feet before being shot three times in the back, said police spokesman Pedro Cordoba Escobar. His deputy Moises Ramirez Ramos was hacked to death by protesters after both were taken hostage before dawn.
Another man was killed about 11:30 A.M. when angry town residents armed themselves in an attempt to defend the hall. Residents hacked with machetes and then shot dead a man suspected of being one of the protesters, and a seventh person also died from injuries in one of the attacks, according to a government statement.
Police fired tear gas and bullets around 3:30 P.M., forcing the protesters to take refuge in the nearby church and then flee town.
Espinosa said peasants in the area were worried that armed cattle ranchers might intervene.
Land disputes have been at the core of the Chiapas uprising, and ranchers have armed themselves with automatic rifles to oppose a series of land take-overs by peasants emboldened by the guerrilla uprising. Occasional deaths have been reported in a series of confrontations over the past months between the landowners and the peasants, who have seized thousands of acres.
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