Championship leader Ogier had led after Thursday evening's opening three stages but stood to lose ground on El Chocolate, the day's longest test, as the first man to tackle the 34-mile stage.
Ogier did well to record the third-fastest time on SS4 after picking four soft tyres and one hard for the loop but sure enough lost the lead to Latvala, who benefited from running seventh on the road to go a full 22 seconds quicker than the Frenchman.
Latvala duly extended his lead on the following stage, Las Minas, and carries a 21.2s advantage into this evening's loop despite losing a second to Ogier on SS6, the 0.86-mile street stage in Leon - the base for Rally Mexico.
Tanak explains cause of Rally Spain puncture
Thierry Neuville had started the day second but stopped on SS4 with a broken steering arm with less than 10 miles to run on El Chocolate - the stage he rolled on last year.
Instead Dani Sordo has upheld Hyundai's honour, the Spaniard holding third after setting the second-fastest time on SS4.
He trails Latvala by 33.4s, with a 10.5s margin over the third Volkswagen Polo R WRC of Andreas Mikkelsen, who was fastest on SS6.
M-Sport's Mads Ostberg said his selection of five hard tyres for the loop had been 'one of the biggest mistakes' he had ever made, but he nevertheless ended the morning in fifth - albeit a minute-and-a-half down on Latvala.
Hayden Paddon made the same choice of tyres and is a further 7.4s back, while Ott Tanak holds a lonely seventh place.
Mexican driver Benito Guerra had been running competitively and was eighth after SS4 but stopped shortly after a jump in the middle of Las Minas.
His demise instead promoted Martin Prokop into the position, the Czech making his first start of the season in Mexico, while Lorenzo Bertelli is ninth.
The only other WRC runner still on the leaderboard is Eric Camilli, who has forfeited over six minutes having picked up a puncture on El Chocolate.
Follow WRC Rally Mexico from 8:20pm UK time on Friday and all weekend with Autosport Race Centre Live.
Tanak extends Rally GB lead, Ogier in second
Citroen chasing Ogier, Lappi, Breen line-up