The move was announced on the military's television channel at 3 am (1:30 IST).
"The Army aims to maintain peace, order and public safety for all groups and all parties," a ticker running on the army's television channel said. The military insisted that its assumption of responsibility for national security was not a coup.
"People are urged not to panic, and can carry on their business as usual. Declaring martial law is not a coup d'etat," it said.
The military statement was signed by army chief Prayuth Chan-Ocha, citing a 1914 law that allows it to intervene during times of crisis.
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Martial law comes after a long-running political crisis, and months of escalating tensions between the government and the opposition. Anti-government protesters staged mass protests in recent days to topple the government.
The crisis deepened when a constitutional court removed Yingluck Shinawatra from her position as prime minister for abuse of power along with nine cabinet members.
The military, which has staged 11 successful coups since the end of absolute monarchy in 1932, also declared that all of the country's radio and television stations must suspend their normal programs "when it is needed."
All Thai TV stations are being guarded by the military, Thai public television announced, showing pictures of soldiers and armoured vehicles taking positions outside broadcast facilities in the country's capital.