Commander Somsak Nilbanjerdkul, said the group had apparently smuggled illegal drugs from a "neighbouring country" into the northern border province of Chiangmai.
The soldiers surrounded the suspected drug dealers, who refused to be searched and resulted in a shoot out.
The team waited until daylight to search the scene, fearing they might be attacked if they moved forward in the dark.
They found eight bodies and nine bags containing 550,000 methamphetamine pills, or yaba, and 70 kilogrammes of crystal methamphetamine, or ice, worth more than 500 million baht in total.
The crystal meth was hidden in teabags.
They also found three AK-47 rifles, one 9mm handgun and a .22 pistol.
There were no reports of any casualties among security forces.
There has been a marked increase in seizures of methamphetamine in the country, smuggled usaully from neighbouring Myanmar where rebels use profits from narcotics to fund their operations.