Inside the Hunt for HAMBALI.

Authorities in Thailand almost missed their man. They had been warned that the suspected terrorist known as Hambali was heading their way when he was thought to be in southern China, and were watching for him along the Burmese border. Even so, the Indonesian-born Qaeda leader slipped into the country unnoticed. Plastic surgery and a fresh shave had made him difficult to recognize. "We got a tip that he was going to come in, so we put a lookout for him," says a Thai police source. "Well, he came in, but we didn't know it until he was almost in Bangkok."

Fortunately Hambali, considered one of the world's most dangerous terrorists and the mastermind behind last year's Bali bombings, had inadvertently left a trail his pursuers couldn't miss. Everywhere he went, he reached out to allies and friends: officials in Bangkok claim he was trying to put together a suicide squad for an attack during the Asia-Pacific Economic Cooperation conference in October, when U.S. President George W. Bush and other world leaders would be visiting the Thai capital. Police and CIA operatives monitored Hambali's contacts for a couple of weeks. Then on Aug. 11, in the ancient Thai city of Ayutthaya, about 40 miles north of Bangkok, they closed the net. "Hambali was one of the world's most lethal terrorists," Bush told U.S. troops in San Diego after the capture. "He is no longer a problem."

U.S. intelligence sources say it is hard to overstate the importance of Hambali's capture. He was not only the "operational mastermind" of Al Qaeda's Southeast Asian associate, Jemaah Islamiah, but Osama bin Laden's senior representative in the region. The 39-year-old West Java native has been implicated in planning for the 9/11 attacks, the nightclub bombings that killed 202 people on the island of Bali in October 2002 and numerous other deadly terrorist incidents, including the bombing of the Marriott hotel that killed 12 people in Jakarta on Aug. 5.

His arrest could lead to answers to many of the lingering questions about these attacks and could help unravel other plots still in the works. NEWSWEEK has learned that at least one major Qaeda detainee in U.S. custody has alleged that Hambali was assigned to recruit additional teams of hijackers to launch follow-up attacks on U.S. targets after 9/11. A U.S. official says those allegations have been corroborated by other intelligence sources and are regarded as credible by senior officials. "It is likely that he has extensive knowledge of former and current Jemaah Islamiah operations in the United States and elsewhere," adds a U.S. official. "He is a ruthless terrorist intent on killing as many Americans as possible. And in terms of Southeast Asia, he was the [Qaeda] chieftain."

Hambali's exploits have been all the more impressive to officials and terrorism experts given that he's been on the run since at least December 2001. Authorities are now trying to retrace his steps; he's believed to have traveled with a small entourage across much of Southeast Asia in recent months, staying at various times in Malaysia, Cambodia, Burma and Thailand.

It was in Thailand that Hambali finally slipped up. Thai officials-- with the help of the CIA--determined his whereabouts after tracing a telephone call he made to a suspected Indonesian terrorist who was already under surveillance. A Thai military-intelligence source claims that CIA agents and a Thai antiterrorism task force kept Hambali under surveillance for two weeks before they finally made the bust--in an attempt to learn as much as possible about his circle of supporters and planned attacks before his arrest. When Thai police burst in on Hambali's studio in Ayutthaya's Boonyarak apartment complex, they found the terrorist, his Malaysian wife, Noralwizah Lee, and a large amount of money, reportedly supplied by Qaeda agents.

What that money was for is one of many pressing questions American interrogators --have for Hambali. (The suspect was quickly whisked out of Thailand by the CIA and taken to an undisclosed location.) Other arrests are likely ...