The gunmen entered the Estrella de Oro bus terminal, located in the southern section of Cuernavaca, around 5:45 a.m. and opened fire, the Efe news reported.
A man who was wounded in the shooting told reporters that he and the young men killed by the gunmen had gone to the bus terminal to pick up a person travelling to Cuernavaca from the southern state of Guerrero.
The gunmen, who were travelling in an SUV, intercepted the group as they reached the terminal, the shooting survivor said, adding that the young men tried to run but were chased by the hitmen.
Initial reports said all the victims had been shot in the head.
Three of the young men were killed in the bus terminal's parking lot and the other two died inside the building.
Morelos state government official Jose Manuel Sanz Rivera told reporters that the attack may be linked to the arrest of Cartel de Los Rojos leader Santiago Mazari.
The drug cartel boss was arrested last month in Guerrero after engaging in a turf war with rival in that state's mountains.
Morelos is dealing with a wave of violence that left 88 people dead last month as rival drug gangs wage a turf war.
Among the criminal organisations battling for control of the illegal drug trade are the Abel Magaña gang, the Cartel Jalisco Nueva Generacion, the Sinaloa cartel and Los Rojos.
Over the weekend, at least 17 people were murdered in Morelos, with most of the killings occurring in the cities of Cuernavaca, Jiutepec and Emiliano Zapata.
Suspected gang members, meanwhile, posted messages in the southern part of the state warning residents that criminal operations were being carried out, a move that caused a panic and led to the closings of several schools.
Some businesses closed during the weekend in the cities of Miacatlan, Mazatepec, Tetecala and Coatlan del Rio.
( With inputs from IANS )