Lucas Tecu and Mario Acoj are the first suspects to be arrested over the 1982 killing in Plan de Sanchez.
The army and members of a civil defence force, to which the two belonged, suspected the villagers of supporting a left-wing rebel group.
Witnesses said the victims were rounded up, had grenades thrown at them, and those who tried to flee were shot.
Mario Acoj was a patrolman in the civil defence force and Lucas Tecu the military commissioner in the area where the massacre took place.
Lawyer for the prosecution Edgar Perez said Mr Tecu would have taken part in the planning and execution of the killings.
"The massacre was carried out on market day, when everyone was gathered in the main square," Mr Perez said.
Mass graves
The victims were mainly members of the Achi indigenous group.
They had refused to join the so-called civil defence groups set up to fight the left-wing guerrillas, thereby arousing suspicion among the military that they supported the rebels.
The survivors were forced to bury the victims, many of whom had been set alight.
Exhumations of the hastily-dug graves led to the identification of 268 victims.
The arrest comes just over a week after four former Guatemalan soldiers were sentenced to 6,060 years in prison each for the 1982 massacre of 201 people in the village of Dos Erres.
An estimated 200,000 people were killed in Guatemala's 36-year civil conflict, which ended in 1996.
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