Wayne Rodney Schneider, 37, was kidnapped on Monday by a gang of men, believed to be foreigners, outside his house in Pattaya, a seaside resort town notorious for its sprawling red light district and links with organised crime.
Police launched a frantic search after security guards saw the Australian beaten unconscious and then bundled into the back of a van which sped off.
But their search took a grim turn late Tuesday when his corpse was discovered outside the city.
Police have named their chief suspect as Antonio Bagnato, a 27-year-old Australian national.
Also Read
Sukthat said five people were believed to be involved in the kidnap and murder and that Bagnato had likely fled the country.
He added that an American national had been detained at a border crossing while trying to reach Cambodia and was being questioned as a suspect in a Pattaya police station.
Schneider's body was found in the Sattahip district south of Pattaya, he said, adding that cause of death had yet to be determined and that an autopsy would be carried out.
The Australian had been in Thailand for around one month and had rented a house, putting down a 130,000 baht (USD 3,626) deposit for six months.
Pattaya is a town renowned for its seedy underbelly but it is unusual for foreigners to be killed in such a brazen manner.
The Sydney Morning Herald said Schneider had previously had run-ins with the law in his homeland, linked to his membership of the Hells Angels.