NEW YORK (FORTUNE Magazine) - Just about everyone who works on Wall Street has heard the stories about Jamie Dimon. The one about his shutting down the gyms and pulling the fresh flowers at J.P. Morgan Chase. (That story is true.)

And the one about his grilling limo drivers parked in front of headquarters to find out who'd ordered the Lincolns, then screaming at the culprits for wasting money. (That one's apocryphal, but Dimon doesn't mind people repeating it, because fear helps him control costs.)

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Here's one you haven't heard. Dimon became president of J.P. Morgan Chase (Research) in mid-2004 when it acquired Bank One, where he had been CEO. Soon after, he convened an emergency meeting and ripped into his new colleagues for "letting pay get totally out of hand." (This is an excerpt from a story in the April 3 issue of FORTUNE. To read the complete story, click here.)

Among the examples that set him off: Regional bank managers at J.P. Morgan earned around $2 million -- five times the $400,000 that comparable Bank One people made. Outraged, Dimon announced he was slashing compensation for hundreds of staff positions by 20 to 50 percent over two years.

"I'd tell people they were way overpaid," Dimon recalls, "and guess what? They already knew it." The kicker: Most of the managers stayed on despite the cuts.

As these stories suggest, Jamie Dimon is not known for subtlety. Yet far from hindering his career, this brash, iconoclastic manner has made Dimon the most watched, most discussed, most loved, and most feared banker in the world today.

From Wall Street to the City of London, just mention "Jamie," and everyone knows you're talking about the rampaging rebel who's as loud as he is tight-fisted. He's much more than a cost cutter with a colorful personality, and his compulsive candor is just one of his highly effective management tools.

Working alongside boss and mentor Sandy Weill, Dimon helped engineer 12 years of audacious mergers that turned an obscure Baltimore loan company called Commercial Credit into Citigroup (Research), the world's largest financial services company.

After being unexpectedly shoved aside by Weill, he re-emerged at a dysfunctional Bank One, turned it around, and sold it in the deal that made him, as of January, CEO of J.P. Morgan Chase, the third-largest financial corporation in the U.S. (2005 revenues: $55 billion), behind Citi and Bank of America.

Now he wants to perfect the model he and Weill created at Citigroup -- and defeat the house he helped build. That's why investors, industry watchers, and fellow CEOs trade all those Jamie stories. And they know that Jamie is just itching to expand his empire with at least one breathtaking deal.

Dimon is a rarity in the business world, a blend of an analytical, Cartesian mind and a wild but inspiring personality. While Dimon's rudeness can be off-putting, the sheer force of his passion and intensity can be irresistible. And that's been the story of his life.

"He loves misbehaving in places where he's supposed to behave," says his wife, Judy Dimon, who met him when they were fellow students at Harvard Business School.

His aversion to waste isn't limited to the workplace. He's so frugal that, to the shock of family and friends, he continued to wear T-shirts with the Citigroup logo long after Citi had fired him.

It would be hard to find a company more in need of the Dimon treatment than J.P. Morgan. A hodge-podge of businesses from multiple mergers that were never fully integrated, the giant bank is burdened with a lazy culture and an underperforming stock ripe for reinvigoration.

"It's offensive to me to be called a cost cutter," says Dimon. He has a point. Dimon's strategy is to lower expenses, then reinvest the savings in new systems and products that make revenues grow, at the same time keeping a lid on costs.

At the Chase branches, bankers used to make about the same bonuses if they slept behind their desks or hustled for new business. Dimon galvanized the branches by paying stars bonuses of up to $145,000, and firing the laggards.

He's also a hawk on getting the branch's businesses to sell each other's products: Last year, credit card sales in the branches soared 50 percent, and bankers covering medium-sized companies steered $500 billion in fees to the investment bank.

An extraordinary reunion took place last summer. Citigroup CEO Chuck Prince invited a dozen current and former colleagues, including Sandy Weill and Dimon, to dinner. They gathered in a renovated mansion on the grounds of Citi's Greenwich, Conn., retreat, a place many of them had been coming to since the late 1980s when Commercial Credit bought it.

Back then, the building was a ramshackle relic with leaky plumbing and worn furniture, decorated in a style they called "early frat house." "You finally fixed it up," Dimon said, admiring the sumptuous renovations.

Of course, Dimon is deep into a renovation of his own. What was unspoken that evening is that he wants nothing more than to vanquish the very people with whom he was swapping memories. And that's one Jamie story that remains to be told.

This is an excerpt from a story in the April 3 issue of FORTUNE. To read the complete story, click here.