Paez is a circus performer in his northwest Mexico hometown since he was very young. There, he learned acrobatic moves that he would later use in the boxing ring. Paez's ring actions are nowadays sometimes compared to those of Muhammad Ali, Hector Camacho and Naseem Hamed. He once entered a ring wearing a Batman vest, and another time, during a interview after a fight, he took off the microphone's cap and put it on his nose, making it look like a clown's nose.
He began boxing professionally on the night of November 16, 1984, knocking out Efren Treno in three rounds. From there on, he built a string of wins that led him to challenge IBF world Featherweight champion Calvin Grove for the world title, in what was a historic fight because it was boxing's last 15 round world title fight ever. Paez was trailing on all three scorecards, but he dropped the champion three times in the last round, which made him edge the bout by a close margin on each of the judges' cards and become world Featherweight champion by a unanimous decision. He defended the world title eight times, including a knockout in 11 against Grove in a rematch, decisions over former world champions Louie Espinoza and Stevie Cruz, and another decision, against future world champion Troy Dorsey. Then, he went up in weight and lost to IBF Jr. Lightweight world champion Tony Lopez in a world title try.
Paez kept on going, and he had mixed results versus former world champions Lupe Suarez, Tracy Spann and future world champion Rafael Ruelas: he and Suarez drew in 10 rounds, he beat Spann by a 10 round decision, and he lost by knockout in the 10th to Ruelas.
In 1993, Paez announced he was going up in weight to the Lightweight division. By that year also, his movie, Pelo Suelto, where he starred alongside maligned Mexican diva Gloria Trevi, which was filmed in 1991, had received much international attention. On July 17 of that year, he lost to Freddie Pendleton by a decision in twelve for the IBF's world Lightweight title, and in July 29 of 1994, he was given a shot at the WBO's vacant world title against Oscar De La Hoya in a HBO Boxing televised bout. Paez lost to De La Hoya by a knockout in round two.
Paez kept winning fights, and in 1996, he made his Hollywood debut, in the low budget movie Dirty Work. In 1997, he lost by a knockout in eight to Angel Manfredy. In one of his last fights, Paez, who can nowadays be seen fighting often on Univision televised cards, beat Verdell Smith, (who also lost to Julio Cesar Chavez), by a knockout in the third round.
Paez was supposed to fight Jesus Chavez in a rematch fight on March 29 of 2003. However, it was discovered that Paez suffers from brain swelling, putting the fight with Jesus Chavez and his career in serious jeopardy.
Despite these findings, Paez fought on, and on December 5, 2003, in Phoenix, Arizona, he defeated Scott McCraken by a split ten round decision. He spoke about retiring and moving to Phoenix after that fight.
Paez's name surfaced in the 2004 FBI investigation against promoter Bob Arum. The FBI is investigating whether Paez's win over Verdell Smith was a fixed fight or not. Paez apparently was unaware the fight was fixed, if that was the case.