Several monks were among those injured when a remote-controlled device in a rubbish bin was detonated by mobile phone as five Buddhists collected alms in a street in the city of Narathiwat, police said.
The attack is believed to have been carried out by Muslim separatists who have been fighting Thailand's mainly Buddhist government since early 2004.
The soldiers were accompanying the monks to protect them from attack.
One soldier died on his way to hospital, while other soldiers, monks and four passers-by were wounded, police said.
The insurgency in the three southernmost provinces of Pattani, Yala and Narathiwat - an Islamic sultanate until Bangkok annexed the region a century ago - has shown no sign of abating since a coup led by a Muslim general overthrew Thaksin Shinawatra, the elected prime minister, on September 19.
Muslim separatists carried out a series of attacks last week.
In Narathiwat province, separatists set off a bomb under a table at a crowded teashop, killing four people, on Friday.
A week earlier, a migrant worker from Myanmar was beheaded in front of his teenage daughter.
More than 1,500 Thais have been killed since 2004
The militants tossed his head on the side of a village street in Narathiwat and then set off a remote-control bomb when police tried to retrieve it.
Since the coup, Surayud Chulanont, the former army chief appointed prime minister by the military, has said he wants a peaceful solution to the violence.
He has offered to hold talks with leaders of the Muslim insurgency, a reversal of policy from the days of Thaksin.
However the military also extended the emergency rule ordered by Thaksin, which gives sweeping powers to the authorities.
Aceh peace-deal eyed
During an official visit to Jakarta on Saturday, Surayud hailed Indonesia's Aceh peace accord signed in Helsinki last year which ended a separatist insurgency which had killed 15,000 people since 1979.
"Indonesia has set a model in solving the conflict in the Aceh province successfully," a Thai government web site, thaigov.go.th, quoted Surayud as saying after meeting Susilo Bambang Yudhoyono, the Indonesian president.
"The Aceh model is a good example to bring peace to southern Thailand," Surayud said.
Surayud also went to Kuala Lumpur this week for talks with Prime Minister Abdullah Ahmad Badawi, who promised full co-operation with Thailand.
Under Thaksin-era relations between Thailand and Malaysia became strained after Bangkok accused mainly-Muslim Malaysia of sheltering Islamic insurgents.