Those detained include Boonthakorn Wimol, 47, abbot of Wat Pa Thep Nimit in Kranuan district, 39-year-old monk Chai Murichan, and a 13-year-old novice monk whose name was withheld.
Two accomplices, Sahawat Mool-ad, 39, and Ruangroj Phosawat, 28, were also arrested.
Police seized about 350 fragments of human skull from the suspects.
The arrests follow a complaint filed by the relatives of a dead man, Suwicha Sobanthao.
They accused the suspects of digging up his body, which was buried in the temple’s graveyard.
Police said the suspects admitted to stealing the skull from the body on Oct 2.
In the process of making the talisman, the monk breaks the skull into pieces, chooses the "good looking" fragments and draws on them a picture of a naked woman and few supposedly "magic" inscriptions.
The monks allegedly worked with Mr Sahawat and Mr Ruangroj to sell the talismans in Hong Kong. The skull fragments were sold at 1000 to 3000 baht per piece.
The detained abbott said they used the money to buy drugs for their own use and for other monks, according to police.
The suspects admitted they had robbed three graves, police said.