The street art of Richard Hambleton

He's the forgotten father of street art. Today Richard Hambleton's name is unfamiliar to all but a few aficionados of the early 1980s New York art scene. In his heyday, he was the kingpin of that scene, more famous – and valued more highly – than his now-venerated contemporaries Keith Haring and Jean-Michel Basquiat. In the late 1970s and 1980s, he peopled the pavements and walls of America and Canada with his fake murder scenes and lurking shadowmen, surprising, terrorising and delighting passers-by with artistic interventions and street stunts before Banksy was even out of nappies. Courted by Andy Warhol, who begged to paint his portrait, only to be refused point blank, praised by Life magazine, who put him on their cover not once, but twice and feted across Europe where he exhibited at the Venice Biennale, his high point came in 1984, when he painted 17 life-size figures on the East side of the Berlin Wall, before returning, a year later, to paint the West side too.

And then – nothing. In 1985, Hambleton disappeared, withdrawing into the shadows like one of his paintings, to hole up in his Lower East Side den with only heroin and hookers for company. While Basquiat and Haring were to become victims of the scene, both dying young, Hambleton, somehow, survived. But as his former street mates' legacy grew, Hambleton's reputation faded. An ex-girlfriend stole 40 of his paintings and sold them off on the cheap and the artist found himself living rough. For nearly a quarter of a century he stopped sharing his work, refusing commercial representation, turning down exhibitions and selling his work on an ad-hoc basis when he needed to pay his rent. The once ubiquitous scourge of the streets had become a recluse.

Now aged 56, he's (reluctantly) back in the limelight, thanks to two young curators who have put together a show of over 40 works, half of which have never been exhibited before. Vladimir Restoin Roitfeld, son of the editor of French Vogue, Carine Roitfeld and Andy Valmorbida tracked Hambleton down after a tip-off from the veteran New York art dealer Rick Librizzi, the man who gave Warhol his first break. Twice the artist slammed the door in their faces. On the third visit, he finally let them in. "He never opens the door to anyone," says Restoin Roitfeld. "He let us in because we were young and he didn't see us as a threat. He doesn't really leave the house any more. He's like a walking ghost."

After much cajoling, Hambleton agreed to a show which has now opened in London, his first ever solo exhibition in the UK. Last year, Restoin Roitfeld and Valmorbida exploited all of their connections and, having secured sponsorship from keen collector Giorgio Armani, opened the show during New York Fashion Week. Josh Hartnett, Alicia Keys and Lindsay Lohan all turned up to the private view then went on to a glitzy dinner at the Armani Café. Old habits die hard, though, and Hambleton, due to be seated next to Bruce Willis, no less, was nowhere to be seen. He eventually turned up, beyond fashionably late. Worried that he had no smart shoes to match the dress code, he'd painted an old pair black and had been waiting for them to dry.

The show sold out – the artist now commands upwards of £30,000 to £150,000 for a canvas – and has since toured to Milan and Moscow, where it broke all visitor number records at the Museum of Modern Art. At a star-studded auction at Cannes earlier this year, he was asked to contribute a work to a charity sale where it would be auctioned off by Simon de Pury alongside works by Warhol, Testino and Schnabel. "He had six months to make a work, but he never got round to it," says Valmorbida. Eventually they auctioned off an existing piece, where it raised nearly €1m. "He's not somebody who makes life easy," sighs Valmorbida. "He's no angel."

Hambleton was born in Vancouver and went to art school there, founding the Pumps Centre for Alternative Art in 1975. In 1976, he began to paint murder scenes on the streets, tracing around the bodies of compliant friends and adding lurid splashes of red paint. Over two years, he chalked up more than 600 in 15 cities, often choosing relatively low-crime areas for maximum effect. His efforts led to him being branded a "psychic terrorist" and a "sick jokester" on the front of the San Francisco Examiner.

His next attention-grabber was to paste up 800 life-size photographs of himself – dressed smartly in a suit, hand tucked Napoleon-style in his jacket, eyes crazed – on street corners in 10 cities across America and Canada. He followed it with his most famous works, the shadowmen, menacing silhouettes lurking in dark alleyways and on shady corners. They became well-known figures in crime-ridden 80s New York, causing nervy pedestrians to jump and sending already irascible cab drivers round the bend. They'd even spook Hambleton himself: always on the run from the police, occasionally he'd mistake his own paintings for an officer lying in wait.

It was around this time that he started hanging out with Haring and Basquiat. The latter frequently added his own "tags" to the shadowmen, painting his signature skulls, crowns and cat's heads onto the silhouettes, creating prized hybrids. The artists began to trade their work between themselves: one Hambleton was worth four Basquiats, apparently. "He created commercial street art," says Valmorbida. "He was the first to use the streets as a canvas."

Having crowded New York with over 450 shadowmen, Hambleton set his sights further afield, taking his work to over 24 cities across America and, eventually, Europe, where he was spotted by, among others, a young Blek le Rat, the stencil artist who in turn inspired Banksy. "Richard Hambleton's shadowmen that I discovered in Paris were a great inspiration to me," says the Parisian. "He was the first to export his work to the urban space of cities all around Europe. He's the only artist I ever bought a painting off, one of the greatest."

As with many street artists, Hambleton eventually retired from pounding the pavements to work on canvas in his studios. He repeatedly painted versions of the horse and cowboy of the Marlboro cigarette advertisements (a motif also picked up, to lucrative effect, by the American artist Richard Prince) in bucking, swirling motion. There are several of these in the London exhibition – some in black silhouette, some ghosted in layers of white paint, others on a glittering pink background. Most striking are his shadow paintings – men wielding guns, leaping through the air or posing moodily – dynamic ink blots, leaving flecks of black in their wake.

Later works include his so-called "Beautiful Paintings", quieter landscapes, in shimmering blues and greens or apocalyptic reds and oranges and giant, foaming wave paintings made by hurling white paint at the canvas then frantically working at it with his fingertips. At the glamorous private view at The Dairy in London last week, guests including Maggi Hambling (an expert on wave paintings, if ever there was one), David Walliams and Lara Stone and assorted fashion mavens sipped vodka on the rocks in front of two of these vast Hokusai-style canvases. Come January, they are to be installed in the plush, starchily formal dining room of New York's Four Seasons Hotel – proof that, whether he likes it or not, the long-forgotten street artist has finally come in from the cold.

Richard Hambleton: The Godfather of Street Art, The Dairy, 7 Wakefield Street, London WC1 (020 7269 9750) to 3 December