Prosecutors said they have enough evidence to believe that Juana Barraza, 48, is the notorious 'Little Old Lady Killer' who has been terrorising elderly residents in Mexico for two years.
Authorities also announced they had solved another string of killings arresting a former soldier who publicly admitted luring gays away from bars and killing them.
Both suspects confessed to killing at least some of their victims when they were paraded in front of the media, a tradition in Mexico, where police and prosecutors have faced criticism for failing to investigate, let alone solve, most of the city's crimes.
At a news conference, Raul Osiel Marroquin, 29, coldly described killing four gay men before his arrest on Monday in Mexico City.
Although there had been some reports of attacks against gays increasing, Marroquin's arrest was the first confirmation of a serial killer targeting homosexuals.
"I snuffed out four homosexuals that in some way were affecting society," said Marroquin.
He told reporters he would kill again, if given the chance, but would "refine his methods."
Police said Marroquin tortured his victims before hanging them, and even carved a star into the forehead of one man.
They also accused him of kidnapping two other gay men, but said he let them go for a ransom.
Meanwhile, police also arrested Juana Barraza, a former professional wrestler, as she fled a house where Ana Maria Reyes, 82, had just been strangled with a stethoscope.
Mexico City Attorney General Bernardo Batiz said they have enough evidence to believe Barraza is the 'Mataviejitas' who has been terrorising Mexico City's residents for two years.
Tipped off by a neighbour, police captured her outside the house and summoned the television crews.
Barraza told police and reporters that she did kill Ms Reyes, but not the others.
"Yes, I did it," she said, smiling at the television cameras.
She quickly added: "Just because I'm going to pay for it, that doesn't mean they're going to hang all the crimes on me."
Attorney General Batiz told the Televisa network that Barraza admitted to killing three other women in addition to Reyes, and that her fingerprints match those at the scene of 10 other murders as well as one attempted murder.
Police had suspected that the killer was a man dressed as a woman, and they spent months detaining, questioning and fingerprinting transvestites.
But police said the broad-shouldered Ms Barraza resembled composite profiles of the suspect, and a wax mock-up, with a similar short reddish haircut and facial mole.
They said they found in her possession a stethoscope, social benefits papers and a social worker's identification card.
Police have long suspected that the culprit got into victims' homes by pretending to be a government employee who could sign them up to welfare programs.