The crowd, which included Surachai's family members, were forced to return home disappointed, however, after learning the Corrections Department had not yet received a release order.
Surachai, 72, was sentenced to 12 years and six months in prison for violating Section 112 of the Penal Code in a series of speeches deemed insulting to the monarchy.
He has served about three years.
The ailing Surachai decided to seek a royal pardon and his application reached the Office of the His Majesty's Principal Secretary in August last year.
Other lese majeste convicts who have since applied for a royal pardon have already been released.
Earlier Thursday, chairwoman of the red-shirt United Front for Democracy against Dictatorship, Tida Tawornseth, said Surachai had been granted a royal pardon and would be released in the afternoon.
Following the reports, many red-shirt supporters, rights activists, and ex-lese majeste prisoners gathered at the prison, where they were informed their enthusiasm was premature.
Pranee Danwattananusorn, Surachai's wife, who also waited at the prison Thursday, said her husband wants to return to his home province of Nakhon Si Thammarat after being released.
He would like to take care of his health and his home, which had been deserted since his incarceration, she said. Red-shirt leader Chinnawat Haboonpad, Thursday said the royal pardon had been granted and the release was in process.