Some of the victims were found dead after they tried to hide in the liquor store's bathrooms and nearby alleys.
The motive is not clear, but Guatemalan police are investigating the possible involvement of the country's notorious criminal gangs, or maras.
Some residents said they doubted this interpretation of events.
Local resident Nery Pixtun told the Reuters news agency: "The person or the persons that did this are not mara members. Whoever did this was a professional, it was done by a person trained to use those weapons."
The predominantly indigenous population of the town expelled all police forces from the town in 2005.
They set up their own security scheme. The town has very low crime rates in one of Latin America's most violent countries.
"Nothing like this had ever happened before. We have never seen a massacre like this," said Nacahuil resident Victor Tepen.
His 20-year-old nephew, Javier Tepen, was among those killed.
'Random shooting'
Interior Minister Mauricio Lopez Bonilla announced that the national police force had been deployed in the town to protect the local population.
According to the United Nations, Guatemala had a homicide rate of 38.5 people per 100,000 inhabitants in 2011. Most European countries have a rate of 1, while the United States has a rate of 4.7.
Much of the violence is drug related, as much of the cocaine produced in South America is smuggled into Mexico and the United States via Central America.
The attack took place on Saturday night. No arrests have yet been made.
Local newspaper Prensa Libre reported that a gang had been expelled from the liquor store shortly before the attack.
They are said to have returned, wearing balaclavas, to shoot randomly at clients inside the bar and people at a nearby street.
The group escaped in a stolen car which was later found abandoned outside the town.
San Jose Nacahuil is located some 18 km (11 miles) outside Guatemala City.
The only access to the town is through dirt roads and it takes at least an hour to reach the capital, where many residents work.
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