A 14-year-old girl kidnapped by the gang was freed in the raid, said Julian Leyzaola, deputy public safety secretary in Baja California state.
Juan Miguel "El Boxer" Valle Beltran was arrested after the shootout in the seaside city of Playas de Rosarito, the Mexican army said. He was arrested with 13 suspected underlings, they said.
The army said one of Valle Beltran's followers was killed. The man killed was not identified, but Leyzaola said those arrested told officials he decapitated the gang's rivals and hung corpses from bridges.
Leyzaola said Valle Beltran has been linked to about 50 killings.
The Sinaloa cartel has been laboring to dominate drug running in Tijuana, the coveted border city across from San Diego, since the leader of the Arellano Felix gang was arrested in 2006.
The Sinaloa cartel is led by Joaquin "El Chapo" Guzman, who some observers say has become the most powerful organized crime leader in Mexico.
Meanwhile, in the northeast Mexican town of Guadalupe, gunmen in two SUVs toting high-powered weapons sprayed bullets at a car, killing all five men inside, said state public security spokesman Jorge Domene.
He said the killings were probably the result of rival drug gangs fighting turf wars over drug peddling sites or settling grudges.
Also Thursday, the attorney general of the Mexico City suburb of Nezahualcoyotl announced that "revenge" was the motive for the shootings between two suspected drug gangs that left eight people dead on Jan. 16.
All of the victims were said to be involved in drug trafficking.
Nezahualcoyotl Attorney General Alfredo Castillo said investigators have identified four suspects in the killings, and that two had been detained.