Mexico and Venezuela have recalled their ambassadors amid a diplomatic spat between the two countries.
Hugo Chavez has refused to apologise for his comments
Mexican President Vicente Fox announced the move minutes after Venezuela said it was ordering home its envoy.
Venezuela's Hugo Chavez refused to bow to Mexican demands to apologise for warning off Mr Fox - after describing him as a "puppy" of US imperialism.
The row began last week, after Mexico supported a failed US bid to relaunch regional free trade talks at a summit.
On Sunday, Mr Chavez accused the Mexican leader of disrespecting him and warned: "Don't mess with me sir, because you'll come out pricked."
He also accused Mr Fox again for allegedly violating protocol in trying to press for an agreement on the Free Trade Area of the Americas (FTAA) when it was not on the Summit of the Americas' agenda early in November.
Mexico said the comments "strike at the dignity of the Mexican people" and demanded a formal apology from Venezuela or severing diplomatic ties.
Venezuelan Foreign Minister Ali Rodriguez called the demand "unjustifiable".
"The immediate return of ambassador Vladimir Villegas has been ordered," he said.
Mexico says Mr Chavez's comments strike at the dignity of its people
The embassy in Mexico would be left "in the hands of an appointed charge-d'affaires," he added.
He said the situation was "entirely the responsibility" of President Fox but insisted it "is not a break" in relations with Mexico.
Moments after Mr Rodriguez' announcement, Mr Fox told CNN en Espanol that Mexico's ambassador would be ordered back from Venezuela.
He said he would consult Foreign Secretary Luis Ernesto Derbez to decide what to do next.
Last Wednesday, Mr Chavez said that Mr Fox had, as he put it, been left bleeding from the Summit of the Americas.
"How sad that the president of a people like the Mexicans lets himself become the puppy dog of the empire", he told an audience of supporters and businessmen in the Venezuelan capital Caracas.
At the summit, the US and Mexico were unable to win backing for a resumption of talks on the FTAA.
They faced opposition from five of the 34 countries attending, among them Venezuela and the host, Argentina.
The other 29 nations - including Mexico - said they wanted to resume talks on the free trade agreement in 2006.