The ministry did not give the exact number of Mexicans killed, or indicate whether the vehicles were targeted by automatic weapons or aerial bombardment, in Sunday's incident, Al Jazeera reportes.
"On the 13th during a joint military police and armed forces operation chasing terrorist elements in Wahat in the Western Desert, four pick-up trucks carrying Mexican tourists were mistakenly dealt with," the interior ministry said in a statement.
"The incident led to the death of 12 and wounding of 10 Mexicans and Egyptians. The area they were in was off-limits to foreign tourists."
Mexico's foreign ministry confirmed that at least two nationals were killed in Sunday's incident.
"For the moment, we regrettably confirm the death of two Mexican nationals in this incident," the ministry said in a statement, adding that five other Mexicans were in stable condition at a hospital.
Egypt is battling an insurgency that gained pace after the military toppled President Mohamed Mursi of the Muslim Brotherhood in mid-2013 following mass protests against his rule.
The insurgency, waged by Sinai Province, the Egyptian affiliate of the Islamic State in Iraq and the Levant (ISIL), has killed hundreds of soldiers and police and has started to attack Western targets.
Popular with tourists
Earlier on Sunday, Sinai Province released a statement carried by its supporters on Twitter saying it had repelled an attack by the Egyptian military in the Western Desert.
Egypt's Western Desert region, which is popular with tourists, is also a hideout for anti-government fighters.
Last month Sinai Province beheaded a young Croatian there who was working for a French company. It has also launched numerous attacks against security forces.
Egypt's economy is traditionally driven by tourism but arrivals have fallen sharply as the country tries to recover from years of political and economic chaos.
About 10 million tourists visited in 2014, down sharply from a 2010 figure of almost 15 million people who visited the country with its archaeological sites and Red Sea resorts.
The fighting in the desert region is a recent development for the insurgency that had been largely based in the Sinai Peninsula, with occasional attacks occurring in Cairo and other cities.
Last week the army launched an operation in the area against Sinai Province which it said killed 56 fighters.
The army often reports large death tolls among the fighters but they are impossible to verify and there has been little noticeable effect on Sinai Province's ability to carry out deadly attacks on the security forces.