Police said the armed men fired five gun shots at the rubber and oil palm growers demanding higher rubber prices, seriously wounding two of them. The incident occurred at about 3am.
Sirichai Boonwong, 30, was hit under one of the eyes and in the chest, while Sithisak Jaingam, 28, was shot in the mouth and the chest.
The two natives of Cha-uat district were admitted to Maharaj Hospital in Nakhon Si Thammarat.
Sirichai, one of the wounded, succumbed to serious injuries at 8.45am.
Pheu Thai Party spokesman Prompong Nopparit said the government had nothing to do with the attack.
Mr Prompong expressed regret for what had happened and called for the protesters to stay calm and allow police to investigate the incident.
He also dismissed as untrue a report that the government had offerred 200 million baht to leaders of rubber farmers in the North and Northeast in return for them cancelling a plan to hold a rally on Sept 3.
He called for Democrat Party leader Abhisit Vejjajiva, who planned to go to visit the protesters on Sunday, to help convey their problems to the government for further action.
Deputy Prime Minister Pracha Promnok said Prime Minister Yingluck Shinawatra is sorry for the shooting.
Pol Gen Pracha said the Royal Thai Police Office had offerred a reward of 100,000 baht for anyone who provided information leading to the arrest of the culprits.
Police had examined the crime scene at the Ban Toon railway crossing and the body of the death had undergone an autopsy at the provincial hospital.
The director of the Central Institute of Forensic Science (CIFS) had been instructed to join the autopsy and the examination of the crime scene, he said.
He believed the bullets buried inside the body would be important evidence leading to the culprits.
Ms Yingluck had expressed regret for what had happened, he said.
Pol Gen Pracha said when the incident took place the police were more than 10 kilometres from the protest site because the protesters did not want the authorities to stay close to them.
He said it would be good if the protesters moved away from the railroad and cancel the blockade.
But if they refused to do so, they should allow the police to stay near or provide security and prevent the situation from becoming deteriorated following the death of a security guard.
Earlier on Sunday morning, Iad Seng-iad, the coordinator of the protesters, read a statement calling for the government to take the responsibility for what happened.
He said the government had accused the protesters of receiving backing from some politicians. In fact, the protesters had truly acted out of grievances.
Mr Iad said protesters were willing to negotiate with the government under the conditions given in the previous statement.
If the government did not respond by 11am on Sept 2, the protesters would step up the protest to a higher level, he added.
Mr Iad said the funeral of the dead guard would be held at the Ban Toon intersection where the protesters would continue to call for justice.
Suriyasai Katasila, coordinator of the Green Politics Group, has condemned the gun attack on the protesting farmers and called for authorities concerned to quickly find the culprits, to prevent the situation from getting deterioated.
Mr Suriyasai said the attack had ruined a chance, which was already slim, for further negotiations between the protesters and the government.
The Yingluck government was also to blame or allowing the protest at two sites in Cha-uat to drag on for 10 ten days without showing any serious intention of ending it, he said.
The government believed the protest was political and had therefore used state mechanisms to drive a wedge among protest leaders in the local and organisational levels, he said.
Moreover, it had instigated the people's hatred towards the protesters, causing them to feel being isolated by the government.
While the people were in deep trouble, the prime minister was busy with her scheduled overseas trips and never thought of going to see the protesters by herself, Mr Suriyasai added.