El Chapo Guzman’s escape route from Altiplano jail was more than 1 mile long and had ventilation and stairs, the national security commissioner said.
Eighteen guards are being questioned.
Joaquin Guzman was last seen in the showers of the jail on July 11. It was the second time he had escaped from a top security prison.
In 2001, El Chapo Guzman broke out by hiding in a laundry basket after bribing prison officials.
He had been serving a sentence of more than 20 years after being arrested in Guatemala in 1993.
His recapture in 2014 was hailed as a victory for Mexico’s government.
Officials say that El Chapo Guzman’s escape was discovered when officers checked his cell in the jail, which is near the capital, Mexico City.
They found a hole around 32ft deep with a ladder, which led to the tunnel, with lighting, ventilation and stairs.
It came to an end at a construction site outside the prison walls, security commissioner Monte Alejandro Rubido said at a news conference.
A motorcycle was also discovered, which police believe was used to transport tools and remove earth from the space.
A manhunt has been launched and flights suspended at a nearby Toluca airport.
Mexico’s President Enrique Pena Nieto has ordered a full investigation to establish whether any officials helped Joaquin Guzman escape.
“I was profoundly shocked by the news. This is an affront to the Mexican state,” he said.
El Chapo Guzman’s wealth is estimated at $1 billion.
His rise to head of the Sinaloa cartel made him the world’s most wanted drug trafficker. It smuggles huge amounts of cocaine, marijuana and methamphetamine into the US.
Before his recapture in 2014, the US state department had offered a reward of up to $5 million for information leading to his arrest.
Attorney General Loretta E. Lynch issued a statement saying the US government shared Mexico’s concern regarding the escape of El Chapo Guzman.
“In addition to his crimes in Mexico, he faces multiple drug trafficking and organized crime charges in the United States,” she said.
Loretta E. Lynch said the US government is ready to co-operate with Mexico to help recapture El Chapo Guzman.
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