Detectives say a gang of seven men wearing camouflage outfits entered a village chief's house in the southern province of Krabi on Monday, casually executing him and seven other members of his family, including three children, with single shots to the head.
Three others were shot but survived, including a woman who played dead after the bullet passed through her ear and was able to give vital clues.
He said investigators believed the killing was sparked by a land dispute between the village chief and a local business figure, nicknamed "Bang Fad", who was also apprehended.
Chaktip said Bang Fad was involved in the murder, adding the other members of the gang had been hired for just 1,000 baht (USD 30) and likely did not know that a massacre was about to take place.
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Because the gang wore camouflage outfits, rumours had swirled in the Thai press that the killers might be from the military.
The killings have dominated local press coverage this week and caused widespread public horror.
Photos taken by medical workers showed two bodies slumped on a blood-splattered children's bed, with a teddy bear thrown to one side.
Firearm ownership is common in Thailand and the country has one of the highest gun-related homicide rates in Asia.
But while petty arguments and disputes frequently turn deadly, mass killings on this scale are rare.