(Updates with confirmation of Guzman's capture)
By Dave Graham
MEXICO CITY, Feb 22 (Reuters) - Joaquin "Shorty" Guzman, the world's most wanted drugs lord, fought his way up from a ramshackle mountain village to become the Mexican government's most powerful adversary in a war that has claimed tens of thousands of lives.
Guzman, who was captured early on Saturday in his native northwestern state of Sinaloa after a months-long operation, gained power by crushing rivals in brutal turf wars and dominated drug smuggling across the border into the United States after escaping from a high-security prison in 2001.
His criminal empire earned him a $5 million price on his head in the United States, and a place on the Forbes list of billionaires.
But in towns and villages across Mexico he was better known for his squads of assassins who committed thousands of murders and kidnappings. Many victims were tortured.
Guzman's Sinaloa cartel smuggled billions of dollars worth of cocaine, marijuana and crystal meth across Mexico's 2,000- mile (3,200-km) border with the United States. Indictments allege Guzman's narcotics were sold from the Pacific coast all the way to New England.
His nickname "Chapo" means "Shorty" and the 5-foot, 6-inch (1.7-meter) gangster's exploits made him a legend in many impoverished communities of northern Mexico, where he has been immortalized in dozens of ballads and low-budget movies
"A lot of people here see Guzman as a success story, because he is a poor guy who has been able to beat the system and become richer than you could ever imagine," said Omar Meza, a singer from the town of Badiraguato, in the heart of the drug lord's territory. "They refer to him as a valiente (a brave one)."
Drug agents concede Guzman, 56, has been exceptional at what he does, managing to outmaneuver, outfight and outbribe his rivals to stay at the top of the bloody Mexican drug trade for over a decade.
"Guzman was schooled, educated and had a PhD in drug trafficking," said Mike Vigil, who spent 13 years in Mexico for the U.S. Drug Enforcement Administration.
Mexican soldiers and U.S. agents came close to Guzman on several occasions but his layers of bodyguards and spies had always tipped him off before they stormed his safe houses.
He was born in La Tuna, a village in the Sierra Madre mountains in Sinaloa state where smugglers have been growing opium and marijuana since the early 20th century.
He rose up in the 1980s under the tutelage of Sinaloan kingpin Miguel Angel Felix Gallardo, alias "The Boss of Bosses," who pioneered cocaine smuggling routes into the United States.
The aspiring capo came to prominence in 1993 when assassins who shot dead Roman Catholic Cardinal Juan Jesus Posadas claimed they had been gunning for Guzman but got the wrong target.
Two weeks later, Guatemalan police arrested Guzman and then extradited him to Mexico, where he was locked in a top-security prison.
Vigil, the DEA officer, oversaw a team of agents that interviewed Guzman in custody.
"He wouldn't cooperate with us at all. He kept claiming he was just a farmer. But that's what they all say," Vigil said.
Guzman used his wealth to ease his prison stay, smuggling in lovers and prostitutes, according to accounts published in the Mexican media.
Eventually, he bribed guards to help him escape and returned to the streets to rebuild his cartel into one of the biggest trafficking empires in history.
Guzman expanded his turf by sending in squads of assassins with names such as "Los Negros" ("The Black Ones") and "The Ghosts" to take business away from rival cartels.
His gangs fought in all major Mexican cities on the U.S. border, turning Ciudad Juarez and Nuevo Laredo into some of the world's most dangerous places.
In one attack in Nuevo Laredo 14 bodies were left mutilated on the street under a note that was signed "Shorty," and read "Don't forget that I am your real daddy."
Guzman's Sinaloa cartel often clashed with the Zetas, a gang founded by former Mexican soldiers that created paramilitary death squads.
The Sinaloans fought fire with fire, arming their troops with rocket-propelled grenades and heavy machine guns.
Guzman also turned on his own. He waged one of his bloodiest campaigns against childhood friend and longtime business partner Arturo Beltran Leyva, alias "The Beard."
In 2008, hitmen hired by Beltran Leyva murdered Guzman's son Edgar, a 22-year-old university student, outside a shopping mall in the Sinaloan state capital of Culiacan.
Guzman reportedly left 50,000 flowers at his son's grave and then returned to war. When Beltran Leyva was finally shot dead by Mexican marines in 2009, a head was dumped on his grave.
In the 1990s, Guzman had become infamous for hiding seven tons of cocaine in cans of chili peppers.
In the 2000s, indictments say Guzman's crew took drugs in tractor trailers to major U.S. cities including Phoenix, Los Angeles and Chicago, from where they were sold across the country by the kilo.
A year ago, Chicago dubbed him the city's first Public Enemy No.1 since Prohibition-era gangster Al Capone.
Forbes put his wealth at $1 billion though investigators say it is impossible to know exactly how much he really made.
Mexican prosecutors say Guzman used his wealth to buy off politicians, police chiefs, soldiers and judges, allowing him to always be one step ahead of the law.
Agents say Guzman hid near his childhood home in the Sierra Madre mountains but rumors abounded of him visiting expensive restaurants with his entourage and paying for all the other diners, although he also took away their cellular phones to prevent anyone calling the police.
In 2007, Guzman married an 18-year-old beauty queen in a village in Durango state in an ostentatious ceremony.
The archbishop of Durango subsequently caused a media storm when he said that "everyone, except the authorities," knew Guzman was living in the state. Guzman's bride gave birth to twins in a Los Angeles hospital in 2011.
Among the many songs about El Chapo, one of the most famous, "The Ballad to Chapo Guzman," celebrated his elusiveness.
"Sometimes he sleeps in mansions, sometimes in tents, with radios and machines guns," the song goes to the sounds of accordions and 12-string guitars. "Sometimes he sleeps under a roof and sometimes in caves. They call him Joaquin, Shorty." (Editing by Kieran Murray and James Dalgleish)