The fans are loving it. On a warm Sunday evening in June, one of hip-hop's hottest stars, Kanye West, is spitting rhymes for 50,000 fans at Giants Stadium in East Rutherford, N.J. West is a bona fide superstar: three Grammys for his first album, millions in sales, a Time cover in the works. But all of a sudden, the crowd turns away from him. A single figure has run onto the stage, prompting such a deafening roar that West is forced to stop and join the adulation, leading the crowd in a chant of "Hova! Hova!" -- shorthand for J-Hova, the latest self-styled nickname of the rapper Jay-Z. Though West is the headliner, it is Jay-Z who steals the show.

The next morning at 9:30 a.m., at the Midtown Manhattan offices of Def Jam Recordings, which distributes Kanye West's music, Jay-Z's weekend appearance is all the buzz. Two dozen staffers, gathered for their weekly meeting in the 28th-floor conference room, gossip about the god-worship. Yet when their boss strides in, fresh from his regular 8 a.m. briefing, he calmly rifles through the agenda -- planning, budgets, promotional deals -- ignoring the Giants Stadium frenzy. Which is a little odd, given that the boss is a man named Shawn Carter --better known as Jay-Z himself.

Welcome to the year's most intriguing corner-office experiment: Carter took over as president and CEO of Def Jam early this year, making an unexpected move from the recording studio to a corporate C-suite. Jay-Z, 35, is hip-hop's reigning megastar, a crossover icon who's had 13 top-selling albums, sold more than 33 million records worldwide, co-founded an independent record label as well as a clothing company, front-lined the fastest-selling sneaker in Reebok's history -- to the tune of $100 million in sales -- and even taken an ownership stake in the NBA's New Jersey Nets.

But Jay-Z's story is more than a rags-to-riches tale of a small-time drug dealer who breaks out of one of the worst housing projects in Brooklyn to amass a fortune of some $320 million. In "getting his executive on," as the kids call it these days, he is not only redirecting the hip-hop culture he helped popularize -- from hooded-sweatshirt thug-chic to button-down-shirt sophistication -- but injecting the music business with a new sensibility. Like fellow hip-hop moguls Russell Simmons and Sean "Diddy" Combs, he is at heart an entrepreneur. Unlike them, he has signed on to go into the belly of a major corporation (Def Jam, which pulled in about $1 billion in revenues last year, is part of Universal Music Group). He is not a traditional CEO -- many financial functions are handled by Def Jam’s corporate parent, while day-to-day details are delegated to seven division heads who work beneath him -- and that is precisely the point. Why waste Jay-Z's time on quotidian affairs when he can bring his hitmaking touch to the label's roster and perhaps become the premier creative force in pop? He gives Def Jam --founded in 1984 by Simmons and Rick Rubin and sold to Universal for $130 million in 1999 --unmatched credibility with the artists that will define its future."You know how people say they want to be 'Like Mike' [in basketball]?" says Semtex, a London-based deejay who is urban promotions/A&R manager for Def Jam in Britain. "In our industry, they want to be like Jay. And not just because he's the best lyricist, but because he's taken control of his career. He inspires artists to reach for that too. If Jay-Z says you have to go back in the studio and write new bars, you’ve got to write new bars. If Jay-Z says your stage show isn't hot, it's not hot. You can't argue with him; he's sold millions of records."

Jay, as colleagues and friends call him, is suspicious of outsiders and protective of his image. Nonetheless he allowed FORTUNE unique access to his new corporate life over several weeks, as he traveled from New York to Las Vegas to Europe and back, taking business meetings, wooing new talent, juggling the demands of Def Jam with those of his other ventures. He gambled at the blackjack tables (winning $130,000), strutted before the cameras with his impossibly glamorous superstar girlfriend Beyoncé Knowles, walked down the red carpet in London to receive British GQ’s International Man of the Year award. Everything he does is both work and play, each party and appearance a promotional opportunity. He exhibits two dueling personas: Jay-Z, the flamboyant performer, and Carter, the wheeler-dealer business impresario. ("Put Jay away, I need to talk to Shawn now," his publicist implored more than once.) As Carter tries to bridge the gap between celebrity and executive, he is struggling for respect. "I'm doing this for other artists and people in this [hip-hop] culture," he said during one discussion, explaining his reasons for going corporate. He also knows performers rarely stay on top long in the youth-driven music market, which is why in 2003 he announced his retirement from making records. As he confided: "There's nothing hot about a 45-year-old rapper."

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