Sergeant Adinan Thatiwarakorn, 46, from the Fourth Army Region, which patrols the southern provinces, was killed as he rode his motorbike to his office in the provincial capital of Yala, district police said.
"He was shot in the head by two men on a motorcycle as he was on his way to work," a police officer said.
Fourth Army Regional Commander Pongsak Enkbansing, who greeted cabinet ministers as they arrived in neighbouring Pattani about 50km from the shooting, insisted the situation was under control.
"We are investigating (the murder). When we compare the situation in the south with that of other provinces now, the south has fewer cases of crime," he told reporters.
About 50 people including soldiers, police, government officials and even Buddhist monks have now been killed in the region since the beginning of the year - many of them slashed or shot by pairs of assailants on motorbikes.
The Thai cabinet shifted its regular weekly meeting to Pattani to discuss a 20 billion baht ($507 million) plan to develop the impoverished region, as well as a proposal to lift martial law.
Thaksin (R) is likened to Bush
in his ''interference'' in the south
The ministers were under heavy guard during their brief visit, with about 3000 policemen, troops and undercover agents guarding routes to the meeting site, and armed Black Hawk helicopters scouring the area, security sources said.
Martial law has been in nominal effect for years in parts of the south, where a Muslim separatist struggle has simmered for decades
The law was clamped into force in four provinces the day after a brazen 4 January raid on an army weapons depot that killed four soldiers.
After the raid, thousands of extra troops, security agents and police poured into the troubled region, but failed to curb the violence which followed.
PM Thaksin's administration has come under fire for its handling of the violence, with critics including religious figures in the south criticising the heavy-handed approach to security.
As the cabinet ministers gathered in Pattani, police detained two people over anti-Thaksin leaflets that were scattered around public places in the city.
The flyer depicted Thaksin and US President George Bush under the headline: Bush disparages Iraqis, Thaksin disparages southerners.
"Bush disparages Iraqis, Thaksin disparages southerners"
The leaflet also railed against Thaksin's "interference" in the three southernmost provinces of Pattani, Yala and Narathiwat, where the bulk of the violence has occurred.
Thailand has joined the US-led occupation in Iraq and sent a 440-strong contingent of engineers, medical teams and a surveillance platoon there last September.
Thaksin dismissed the leaflet campaign. "It's nothing," he said before entering the cabinet meeting.