Allegedly the leader of the Gulf drug cartel and the third major drug boss to fall in the last year, Cardenas was arrested in Matamoros, across from Brownsville, Texas, Defense Secretary Gen. Gerardo Vega Garcia told a news conference.
At least two Mexican soldiers were wounded, one seriously, in the shootout with Cardenas' gunmen, who Vega said numbered at least 300 throughout the border state of Tamaulipas. Vega did not say how many took part in Friday's shootout, nor how many were arrested besides Cardenas.
"Obviously, they put up resistance ... there were shots fired," Vega said, adding that the arrest came after six months of intelligence work.
Cardenas is wanted by the FBI on organized crime and drug charges, money laundering and assaulting federal agents.
Vega said Mexico has received a U.S. request for Cardenas' extradition, but noted that "he will face justice here in Mexico first" on drug, weapons and homicide charges.
Cardenas, 35, is believed to be linked to the killing of four Mexican anti-drug agents in recent months.
But what most infuriated U.S. law enforcement agencies was Cardenas' attack against two DEA agents who went to Matamoros to investigate him in 1999. His henchmen surrounded the agents' car on a city street and forced them to stop.
With assault rifles trained on the vehicle, the drug hitmen including men in Mexican police uniforms held the DEA agents and their Mexican informant until a man identified as Cardenas emerged from the crowd. He demanded the U.S. agents hand over the informant for execution.
"You gringos, this is my territory," he was quoted as telling the agents. "You can't control it, so get the hell out of here."
Mexican agents have often been caught protecting drug dealers. Vega confirmed Cardenas used money to buy the loyalty of some public officials, but refused to say whether they were police or soldiers.
The Gulf Cartel, which operates in northeastern Mexico, was the strongest of the border-based Mexican cartels until 1996, when then-leader Juan Garcia Abrego was sentenced in Houston, Texas, to 11 life terms for drug smuggling. Officials have said the gang is responsible for moving cocaine and marijuana into the United States.
Federal prosecutors believe Cardenas recently made the cartel stronger by forging an alliance with Vicente Carrillo Fuentes, alleged leader of what remains of the powerful Juarez Cartel. The Juarez Cartel operates in the city of the same name, across the border from El Paso, Texas.
Asked if Cardenas' arrest would bring down the Gulf Cartel, Vega said "I don't think so. We must continue with (arresting) the second level operators."
A former mechanic's assistant, Cardenas got his start training drug-sniffing dogs for Mexican agents, but eventually left that behind and rose through the ranks of the region's drug trade.
He has been one of several drug leaders targeted by President Vicente Fox since the Mexican leader took office more than two years ago. Fox has focused his attention on crippling Mexico's drug cartels, and police have responded with several high-profile arrests.
Ramon Arellano Felix was fatally shot by police a year ago in the Pacific resort of Mazatlan, while his brother, Benjamin, was arrested a few weeks later at his home in Puebla. The two brothers were accused of running one of Mexico's most violent drug gangs.
Still, Fox faces an uphill battle. Drug organizations in southern Guerrero state have stepped up attacks against federal police helicopters, causing three to crash this week alone.
One helicopter crashed Thursday after its rotors became entangled in high-tension wires while fumigating marijuana and poppy fields, killing the pilot. The crash came three days after assailants shot down two helicopters participating in the same anti-drug operation. Five agents died in the earlier crash.