Guillermo del Toro: The master of the labyrinth escapes from Middle Earth

His fantastical films explore many horrors, but none quite so terrible as his lengthy Hobbit nightmare, he tells James Mottram.

Del Toro with Pan, the title creature of his 2006 classic, Pan's Labyrinth (REX FEATURES)

His cheeks puffed, a mildly harassed Guillermo del Toro has just been struggling with LA traffic when we meet. But there's no sign of road rage on the face of the portly Mexican behind Pan's Labyrinth and the Hellboy films, just the usual scruffy beard and Harry Potter-style spectacles. Indeed, after returning from not-so-tranquil New Zealand, where he has spent the last two years fruitlessly working on troubled Tolkien adaptation The Hobbit, he's probably relieved that the only delays he's facing right now are on gridlocked freeways.

As recent news has shown, del Toro was wiser than even Gandalf when it came to quitting the project back in May. His erstwhile collaborator Peter Jackson, who has finally been confirmed as del Toro's replacement as director for this two-part prequel to Jackson's own hugely successful Lord of the Rings trilogy, must have been tearing his hair out. At the end of September, fire ripped through a Wellington-based workshop where many of the miniature sets were being built for the film. If that wasn't enough, Jackson had threatened to move the whole production to Europe, and possibly the UK, after becoming locked in a bitter stand-off with New Zealand Actors' Equity over pay.

While the film now has a tentative start date of next February (with British actor Martin Freeman due to play Bilbo Baggins), del Toro is the one who has seemingly suffered the most. After spending two years in pre-production, he had received no assurances that it was a go-project, due in part to financial problems at MGM, one of three studios behind it. "It was starting to weigh [on me] in a way that was not positive for me or the project," he says. "People need to fathom this – yes, of course a director sticks with a project for ten years... I've done it myself. But to relocate your entire family life, home, for a period that long without any certainty that it will get made or when it will get made... it started to become very worrisome."

He is married to his high-school sweetheart Lorenza, and del Toro had brought her and their two daughters, Mariana and Marisa, out to Wellington to live while he worked with Jackson on the project. "I really loved the country and could've lived there," he says. Does he regret the time spent, now he has quit? "I tell you in my life, I try not to deal with regrets. I have a huge heartbreak. I have incredible sadness. I have disappointment. I have heartache. I have a piece of me that is dented forever. But no regrets. I don't believe in regrets. It's a huge part of me. And I believe it was the best for me and the project."

Still, it's not as if del Toro hasn't been keeping busy while finding himself mired in Middle Earth. For starters, he has helped produce Biutiful, the new film from Alejandro Gonzalez Inarritu, with whom he formed the production company Cha Cha Cha Films, along with their fellow Mexican director Alfonso Cuaron, who made Children of Men. "In my opinion," he says, "it was very important to jump on board on Alejandro's first solo effort, after his partnership with Guillermo Arriaga [who scripted all three of Inarritu's previous films, including the Oscar nominated Babel], and be part of the adventure."

The film stars Javier Bardem, who won a share of the Best Actor prize in Cannes this year for his role as a father facing terminal illness in modern-day Barcelona. "I think the movie is heartbreaking but beautiful," del Toro tells me, overflowing with pride on behalf of his business partner. While its grimy realism might seem far removed from his own fantasy-led aesthetic, there's no sign that the film-maker himself will be following suit. He has just finished producing and co-writing Don't Be Afraid of the Dark, a Melbourne-shot "fairy-tale gone wrong" starring Guy Pearce and Katie Holmes.

Dealing, as he puts it, with "the horrors of childhood", it returns del Toro to a theme that he has been playing with his whole career. Take his recently published novel The Fall, which he co-authored with Chuck Hogan. The second in a trio of vampire novels, following his 2009 hit debut The Strain, it continues the story of a bloodsucker virus sweeping the globe. Calling this new novel "the deepest, darkest moment in the trilogy", the initial idea is something that plugs right back into his strict Catholic childhood in Guadalajara. "What I loved and studied as a kid was the parasitic vampire," he explains.

Raised largely by his conservative Catholic grandmother, del Toro admits that he's still dealing with his demons from his early days even now. "I didn't have a physically abused childhood. I didn't have anything physically terrible happen to me. But I had an incredibly tortured childhood. I am now 45 years old and I am much more youthful than I was when I was a kid. When I was a kid, it was all doom and gloom. I spent my nights as a seven-year-old thinking about the world coming to an end, and the rapture and Jesus raising the dead from the ground... I was a Catholic boy with very Catholic nightmares."

If you want cinematic evidence of his difficult upbringing, look no further than the triple-box-set boasting his best three films – 1993 debut Cronos, 2001's The Devil's Backbone and Pan's Labyrinth, which gained six Oscar nominations in 2007, including Best Original Screenplay for del Toro. All three "articulate a [unified] point of view", the director says, but he has only come to realise this in the past few months as he has re-mastered them all for a forthcoming Blu-Ray release. "All the main characters are children and each of them face a unique perspective in horror and the fantastical."

A ghost story set in 1939, during the Spanish Civil War, The Devil's Backbone is seen through the eyes of a 10-year-old son of a fallen Republican war hero. Likewise, Pan's Labyrinth – set just five years later in Fascist Spain – follows the stepdaughter of a brutal army commander as she escapes into a world of fantasy. And in the case of Cronos, the story of an ageing antiques dealer who is bitten by a scarab that bestows immortality, the true heart of this pre-Twilight vampire tale comes through the overwhelmingly sad relationship with a loving granddaughter.

In particular, going back to Cronos was a rejuvenating experience. "It was almost like falling in love again," he says. "Cronos was a movie that was very difficult for me to enjoy in the past. But this was different. It was like meeting with a childhood love. It was a really very beautiful encounter. Obviously there are some blatant mistakes that I still would love to correct, but it was truly making peace with any of the errors of youth that had prevented me from enjoying Cronos for a long time. What was beautiful was to recapture the sense of 'we can break the rules' that I had on that film."

While it might be tempting to think del Toro must be keen to return to such smaller-scale fare after the Hobbit debacle, he's already back in the bosom of Hollywood, prepping his next project. A huge-budget 3-D adaptation of HP Lovecraft's horror novella At the Mountains of Madness, del Toro is planning it with the backing of Avatar's James Cameron, who has come on board as producer. "Jim and I have been friends for 20 years and we've been very close. I've been in all his editing rooms. And we've given each other consultation and assistance on a friendly basis. But we have been very careful not to work together in the past."

It is evidently far more of a pet project than The Hobbit; del Toro has been trying to get the film made for 13 years. While Cameron first read his script eight years ago, it was only when the Jackson project fell apart that it felt like the right moment for them to launch their inaugural collaboration. "With Mountains, it seemed like the perfect opportunity to attempt a big-scale 3-D adventure – a cosmic horror in the Lovecraft style. But this is a movie that needs a scope. And we need to protect the three things that I think are essential to the narrative: keep it period, so don't make it a modern movie; keep it a hard R-rated [meaning an 18 certificate in the UK] movie; and make it a painful movie, without a happy ending."

As a statement of intent, doubtless this will relieve Lovecraft fans. Likewise, del Toro's planned remake of Disney property The Haunted Mansion won't be going down the comedy route taken by the atrocious 2003 effort starring Eddie Murphy. "By all means, absolutely no!" he cries at the very thought. Indeed, it seems there's life after The Hobbit after all. He's even still on good terms with Peter Jackson, he says. "The last time we emailed each other was for me to try and get him some tickets to see Derren Brown in London," he smiles. Maybe del Toro should ask Brown to conjure up some good luck for The Hobbit.

'The Guillermo del Toro Collection' is on Blu-Ray. 'Biutiful' will be released in 2011