A container of Iridium-192 used for industrial radiography was taken from a truck in the town of Cardenas in Tabasco state.
The states of Campeche, Chiapas, Oaxaca and Veracruz are also on alert.
Mexico's civil protection agency says that the material can cause death within hours or days if mishandled.
"This source is very dangerous to people if it is removed from its container," the agency warned in a statement.
The unprotected material can cause burns and permanent injuries to those who have been in contact with it for just minutes or hours.
Luis Felipe Puente, head of Mexico's civil protection agency, urged whoever finds the source to keep it at a distance and call for help.
The robbery was reported by the company Garantia Radiografica e Ingenieria which said that the material had been stolen on Monday.
This is not the first time radioactive materials have gone missing in Mexico.
In 2013, a truck carrying a highly radioactive source used for cancer treatments was stolen by thieves on its way to a waste storage facility.
Six people were arrested and taken to hospital with signs of radiation exposure but were later given the all clear by doctors.
They said they had not realised that radioactive material had been inside the truck.
At least two similar incidents happened last year. In both cases, the thieves said they had been targeting the vehicles rather than their contents.
Mexican authorities have issued an alert for five states after the theft of potentially dangerous radioactive materials.