Ten years ago, most people thought Sixto Rodriguez was dead. In fact, that was one of less lurid rumours about him. A letter to Q Magazine in 1996 appealed for "any information about US singer Rodriguez, who wrote all his work in prison and shot himself onstage after quoting from his song Thanks For Your Time". No one replied, possibly because no one in Britain had heard of Rodriguez in the first place, onstage suicide or not.

"It has that combination of obscurity of quality," says DJ and Ocean's Eleven soundtrack composer David Holmes, who found a copy of Rodriguez's remarkable 1970 psychedelic folk album Cold Fact in a New York second-hand shop in the late 1990s, and went on to include its standout track Sugarman on his mix album Come Get It I Got It. "I'd never heard anything quite like it. It was quite surprising to me to see how many people don't know it."

Crackling down a telephone line from Cape Town, Sixto Rodriguez chuckles at the myths surrounding him. "When I started out, a real heavy cat in the music business told me it was going to take me 10 years to get there. In this job, you think it's going to take two weeks, but it takes a long drive, it just takes time." He sounds very much alive, if a little confused. His answers are a bit vague on details, and tend to the cryptic. Then again, you might be a little confused too, given the turns that his life has taken in the past few years. "It was a pretty surreal experience being with him," says Holmes, who met the singer in New York, "but he's had the most surreal journey."

Now 63, Rodriguez was working on a Detroit building site when he discovered he was a star in, of all places, South Africa: a fact that, understandably, "blew my mind". Despite its undoubted qualities - its stream-of-consciousness protest songs, heavy with drug references, are pitched somewhere between Bob Dylan and Love, tricked out with bursts of sinister electronics and luscious string arrangements - Cold Fact had vanished without a trace in the US: a state of affairs not helped when Rodriguez's record label Sussex, also home to Bill Withers, went bust. Bizarrely, however, Cold Fact not only secured a release in South Africa but became a platinum-selling hit. The effect of the album on national service conscripts under the apartheid regime is frequently compared to that of Jimi Hendrix or the Doors on US servicemen in Vietnam.

"South Africa in the early 1970s was a very restrictive society," says Stephen Seger-man, a former Johannesburg jeweller who made it his mission to track down Rodriguez. "Cold Fact was never banned, but it never received any radio play, except on pirate stations like Swazi Radio, which weren't under the censor board. The song I Wonder had this line, 'I wonder how many times you had sex', which for South Africa in those days was about as controversial as it could get. For kids, it was like a joke song, they were like 'listen to this!'. Then they heard the album, and realised there was a lot more in it, it was trippy, it was beautiful, it had a lot of social content. It affected a lot of people in a lot of different ways. The commercial success was unbelievable. If you took a family from South Africa, a normal, middle-class family, and looked through their record collection, you'd find Abbey Road, Neil Young's Harvest and Cold Fact. It was a word-of-mouth success."

The word of mouth did not reach Detroit, where Rodriguez had given up his recording career after a second album, 1972's Coming From Reality, vanished in much the same fashion as his debut. He tried an unsuccessful career in politics, studied for a BA in philosophy, worked in a petrol station and apparently "took part in Indian pow-wows throughout Michigan", before becoming a self-employed labourer. In South Africa, meanwhile, his record company seemed to have no idea of his whereabouts. In place of any concrete information, rumours spread. It was variously assumed he was dead from a heroin overdose, had been burned to death onstage, had been committed to a mental hospital, or was serving a prison sentence for murdering his lover: "Who or what Rodriguez is remains a mystery," claimed the sleeve notes to a reissued CD.

Segerman and journalist Craig Bartholomew began their search after the former discovered to his amazement that Rodriguez was unknown in his home country. After several months chasing false leads, they received a startled email from his daughter: "Do you really want to know about my father?" A series of rapturously received South African tours, two documentaries and a platinum disc followed, a fairly remarkable turn of events for an artist who had never played live in America. "Oh gee, it blew me away when I found out, it was so good," says Rodriguez. "All these youngbloods came rushing towards the stage. It was crazy. In South Africa, people talked to me about how they ran into the album. It happens all over the place, people coming up to me, into the material."

His reputation restored and burgeoning - he's about to play his first UK shows - Rodriguez sounds understandably contented. Only one mystery remains: what happened to the money he should have earned from his 1970s success in South Africa? "We still haven't got to the bottom of that, I'm still sorting it out," he says, darkly. "I don't really know what's going on there." Then his mood brightens. "But we're putting things together, man. I'm long-term, you know what I mean?"

· Rodriguez plays the London Forum Oct 7 and Oct 8