Fiance's mother wants to control everything.

Sounds like Monster in Law. is she paying for it?

Me and fiance are paying for the most of everything. I got down to business with her about that and she told me "I'm only paying for the guests that I invite".

My Parents are also contributing towards our wedding, for the reception food and decor.

Good then, its not her wedding -your fiance probably needs to step in and ask her to fall back if she continues to be ridiculous with the planning

I know agree with you.

I agree with @Angel_D your fiancé should def step in. She's being way to controlling and its your wedding. To keep the peace I would just talk to FH.

Im sorry you have to deal with that. I agree, I think you and FH need to discuss what is going on and if she doesn't stop he needs to step in.

No pay=no say! If shes not paying, its not her decisions! FH needs to also let her know how you guys feel, maybe it will get through to her better coming from him as well?

One way to handle the situation is to make your decisions together and then tell her what you will be doing with disregard for any prior recommendations/ suggestions/ attempted decisions on her part. That saves you the trouble of a head-on confrontation, but shows her clearly that you perceive her input to be merely suggestion. Starting your marriage as a team is so important to the health of your relationship. Also, the groom's family traditionally has little to no say in wedding plans because traditionally the bride's family pays for the party (majority is equal to all according to the rules of etiquette). Your FMIL could use a book on the etiquette of weddings.

Like the other ladies said, if she isn't paying she doesn't have a say. Have your FH talk to her. If she REALLY wants to invite a FEW guests, maybe compromise with her? Like okay you'll squeeze 5 (just a number) into your guest list, but that's all she gets, unless she offers to pay and not only for her guests. Addtional guests are not just budgeted by their plate. It's the extra table, chairs, linens, centerpieces, invites, making room in your seating chart, even the bar tab (not sure if it's an open bar) will go up. Make sure FH explains all that to her. Just stand your ground with the rest. If you both found the perfect venue keep it! It's your day and your dollar!

Good luck!