The location was disclosed by a member of a drugs gang who was attacked by residents of Carrizalillo.
The town is 75km (47 miles) south of Iguala, where 43 students disappeared over a year ago.
Carrizalillo residents say there was unusually high gang activity on the night of the students' disappearance.
Locals say that over the past years, the town has increasingly come under the control of the Guerreros Unidos (United Warriors) drugs gang, whose members extort local businesses and terrorise residents.
They say that in the early hours of 27 September 2014, dozens of armed men belonging to the gang arrived in Carrizalillo in pick-up trucks.
The students were last seen on 26 September 2014.
The government report into their disappearance said that they were seized by corrupt local police officers who handed them over to the Guerreros Unidos.
According to the report, the Guerreros Unidos mistook the students for members of rival drugs gang Los Rojos and killed them.
The report says that the Guerreros Unidos burned the bodies and dumped their remains in Cocula, a small town near Iguala.
However, an independent group of experts has cast doubt on this version of events and the Mexican authorities have reopened their investigation.
In the weeks after the students' disappearance, dozens of mass grave were discovered in Guerrero state.
Hardly any of the bodies have been identified but their discovery has revealed the extent of the violence and disappearances in this region of Mexico.
Relatives of the 43 students, who are still hoping to find them alive, have reacted with scepticism to the theories put forward by the residents of Carrizalillo.
The 43 were all students at an all-male teacher training college in the town of Aytozinapa, in south-western Guerrero state. The college has a history of left-wing activism and the students regularly took part in protests.
They disappeared from the nearby town of Iguala on the evening of 26 September 2014 amid a confrontation between municipal police and the students during which six people were killed.
Independent forensic experts have matched charred bone fragments reportedly found at a rubbish dump near Iguala to Alexander Mora, one of the 43 missing students. They also say there is a high probability another set of remains could belong to Jhosivani Guerrero de la Cruz, another of the students. However, experts from the Inter-American Commission of Human Rights say the chain of evidence was broken and they could not be sure the bone fragments had been found at the dump.
According to the official report, the students were seized by corrupt municipal police officers who handed them over to members of a local drugs gang. The drugs gang mistook the students for members of a rival gang, killed them and burned their bodies at the dump before throwing their ashes into a nearby stream.
They think officials have failed to investigate the role soldiers from a nearby barracks may have played in the students' disappearance. The government has refused to let the soldiers, who were in the area at the time of the disappearance, be questioned by anyone but government prosecutors. The families also point to the report by the Inter-American Commission on Human Rights which said that there was no evidence the bodies of the 43 were burned at the dump.
Forensic experts have been sent to the Mexican town of Carrizalillo to examine human remains found in a number of mass graves.