Both countries have already withdrawn their ambassadors from each other's capitals after a bitter row over free trade degenerated into exchanges of personal abuse.
A defiant Mr Chavez has refused to apologise for calling the conservative Mexican President a "puppy" of US imperialism.
Relations reached a new low last week, when Mexico supported a failed US bid to relaunch the Free Trade Area of the Americas (FTAA) at the Summit of the Americas early in November.
President Fox criticized Chavez's stance at the November 4-5 Summit of the Americas, where the Venezuelan demonstrated staunch opposition to plans for the creation of a pan-American free-trade zone.
Mexico and the United States support the measure.
Responding to the criticism, Mr Chavez demonstrated his characteristically colourful oration by also called Fox a "sell-out" and a "lapdog" of the United States.
The two countries' foreign ministers had appeared to have resolved the row a few days later, but the fiery Venezuelan leader came back to the attack on Sunday.
Mexico's ambassador to Venezuela flew home Tuesday, hours after his
Venezuelan counterpart in Mexico did the same.
The two countries blamed each other for the dispute.