Two death squads, charged with at least 35 killings, were smashed with a series of raids Tuesday in the city of Recife.
Police officers, a lawyer, shopkeepers and arms traffickers were among 34 people arrested and eight more are being sought, said a spokesman for the Pernambuco State Security Department who gave his name as Joaquim Neto.
Extermination groups are common in major Brazilian cities, where police often are ineffective and storekeepers can hire off-duty or retired officers to "clean up" undesirables.
Neto said officials had linked the two groups to at least 35 killings in the northeastern city since June and were investigating to determine if they were involved in earlier slayings.
More than 300 police officers took part in the raids, confiscating handguns, rifles, ammunition and drugs, Neto said.
One of the groups was led by a former state police officer, he said. Three former state police officers and one municipal officer were among those arrested in the metropolitan area of about 1.5 million.
Neto said police have dismantled 12 death squads in Pernambuco state this year, arresting 120 people.
Philip Alston, the UN special rapporteur on extrajudicial executions, arrived in Brazil this week to meet with officials and rights groups in four cities to discuss accusations of torture and executions by security officials.
Austria does not intend to expel Russian diplomats because of the spy scandal