The blast went off about 12.30 pm in the compound of Taluban municipality market in Sai Buri district. Several shophouses caught fire.
The bomb killed six people, two who died instantly at the scene, and wounded almost 50 people, including police, defence volunteers and civilians. Of the injured, 10 were seriously wounded.
The bomb, hidden in a black Chevrolet sedan with fake licence plates, went off when a team of police and defence volunteers were lured to Kamolphan gold shop, opposite a motorcycle repair shop where the car containing the bomb was parked.
The officers went to the gold shop after being alerted by a phone call that an unknown number of armed men had earlier opened fire on the shop, which was only 100 metres from the police station.
The explosion caused damage to several shophouses. Many cars and motorcyles caught fire.
The six dead victims were identified as Worawut Sunthorn, 45, a food vendor; Ariya Saman, 19, a student at an Islamic school; defence volunteer Wichai Sakonthawut, 54; Paisarn Chanthanasap, 54, owner of the motorcycle shop; Saowapa Praditneesilapa, 55, a vendor; and Prapin Kaewthong, a fruit vendor.
Among some 50 injured victims were Pol Col Arzis Umayee, chief of Sai Buri police; Pol Lt Col Pattanapong Thongduang, deputy Sai Buri police chief; Pol Capt Abdul-amid Bueraheng, suppression police inspector, non-commissioned police and civilians.
Army chief Prayuth Chan-ocha admitted violence still existed in the far South even if a group of 93 southern rebels recently turned themselves to authorities as there were several groups of insurgents. Speaking after his return from Indonesia, the army chief said he had discussed the southern violence with his Indonesian counterpart.
He quoted the Indonesian army chief of staff Gen Pramono Edhie Wibowo as saying that Thailand was on the right track to solve the unrest.
He maintained he would give justice to insurgents who surrendered and to victims of southern unrest.
Gen Prayuth said insurgents involved in minor offences such as strewing metal spikes on roads may not face punishment.
However, those involved in serious offences such as killings would not escape legal action.