Starting January 27, 2007, the U.S. State Department will require a passport for all travel to and from Mexico by AIRLINE. If traveling on foot, by car or boat, including cruise ship or ferry, the passport requirement will not come into effect until after January 2008.
At present, the Government of Mexico requires that all U.S. citizens present proof of citizenship and photo identification for entry into Mexico, such as a combination of a birth certificate and driver's license. However, some U.S. citizens have encountered difficulty in boarding flights in Mexico without a passport. More info here