Police say a gang of six or seven men, dressed in camouflage outfits, stormed a house in the southern province around 4:00 pm yesterday.
They took ten people hostage and waited for the owner of the property to return.
"Around 8pm the owner arrived, all of them (the victims) were handcuffed and blindfolded until midnight when gunmen opened fire," Chaiwut Buathong, chief of Ao Luek district, told AFP.
Six died at the scene, two others died in hospital, Chaiwut said, adding three of the victims were girls aged under 15.
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Photos taken by medical workers showed two bodies slumped on a blood-splattered children's bed, with a teddy bear thrown to one side.
"It is under investigation but initially police suspect this is a personal conflict," Major General Worawit Panprung, from Krabi provincial police, told AFP.
Firearm ownership is high in Thailand which boasts one of the highest gun related homicide rates in Asia.
Petty arguments and disputes frequently turn deadly but mass organised killings are rare.
Krabi province is a popular holiday destination boasting beaches like Ao Nang and Rai Ley, though Monday's killings took place in an area removed from the main tourist drags.