Asawin Pakditalep, 26, was found dead after the shooting at Permsap housing estate on Bang Khae Soi 16.
A .38 pistol was found next to his body, which was riddled with bullets, police said.
The shooting followed a car chase that began at Bang Phli-Suksawat expressway toll gate on Rama II Road when undercover police from the Narcotics Suppression Bureau spotted a suspicious pickup truck belonging to the Ruam Katanyu Foundation.
Police were looking into a tip about a suspected drug trafficker disguising himself as a charity foundation worker and using the organisation's vehicle to deal drugs.
Police say the driver sped off when he noticed the officers. They fired at the tyres but the driver kept going.
Police followed the pickup truck to Kanchanaphisek Ring Road and the vehicle chase ended under a flyover bridge across Bang Pruek intersection, where the driver abandoned the vehicle.
The suspect fired at pursuing officers as he fled into Permsap housing estate on Bang Khae Soi 16, police said.
Police sealed off the area and blocked all exits. Officers searched vehicles leaving the housing estate.
When they were about to search a green taxi belonging to Suvarnabhumi taxi cooperatives they were met with gunshots. The suspect had hijacked the taxi to escape, police said, and Asawin was killed in the ensuing shoot-out.
The victim, who sustained more than 10 gunshot wounds, was identified as a contracted worker, hired as a driver, at Yannawa district office.
The taxi driver, identified as Nitiwit Thipcharoen, 32, fled the scene, possibly out of shock, police said, adding that Mr Nitiwit was unlikely to have any connections to the deceased suspect.
Police searched the abandoned pickup and found 2 kilogrammes of crystal methamphetamine in the backseat. Pol Maj Gen Surapol Tuanthong, deputy chief of the Narcotics Suppression Bureau, said police will search the suspect's apartment for more evidence.
Suchart Supawan, of the Ruam Katanyu Foundation, said the suspect had worked for the foundation. He had been warned against modifying the vehicle and using it without permission, he said.
The foundation had lost contact with the worker and suspended him from work for a year. Mr Suchart said the foundation had filed a complaint with police about the vehicle. He said the foundation would ask all its units to temporarily suspend work pending an investigation.
Meanwhile, a Mozambique woman, 37, was arrested at Phuket international airport on drug trafficking charges for possessing ice, or crystal methamphetamine, worth 21 million baht.
Hortencia Ferreira Novela arrived at Phuket airport on Saturday from Malaysia. A total of 6kg of crystal methamphetamines was found in her computer notebook suitcase. The suspect said she had been hired for 50,000 baht to deliver the drugs to customers in Patong Beach, authorities said.