The armoured railway carriage was making a routine track inspection near the Sungai Kolok district station in Narathiwat province when the bomb exploded early on Sunday, tearing the track apart and overturning the carriage, said police Lieutenant Nathiwat Deekaew.
The 10kg device was triggered by a mobile phone at around 2315 GMT, just minutes after the train departed from the station, he added.
Separatists hiding nearby then ambushed the train, shooting at passengers, Nathiwat said.
It is unclear how many people were travelling on the train, but at least 19 were injured, including 11 police officers and eight railway officials.
A gunfight ensued but ended after about 10 minutes. There were no reports of separatist casualties.
More than 700 people have died since January last year in the predominantly Muslim southern provinces of Thailand, a largely Buddhist kingdom.
The government has blamed many of the attacks on the revival of a long-dormant separatist movement.
Southern Thai Muslims have long complained about unfair treatment by the central government, particularly in jobs and education.