It remains unclear who killed him, but his supporters say he was targeted by a sniper. The army, however, has denied any involvement.
Red shirt gathering
Despite his difficult relationship with the state, Khattiya will be given a royal cremation to recognise his senior army rank.
Police said up to 10,000 red shirts were expected at his cremation at a temple close to the heart of Bangkok's government district.
It would be the biggest gathering of red shirts since their mass rally ended on May 19 with an army crackdown on their encampment in the capital.
Bangkok is still under emergency laws banning public gatherings of more than five people.
Many red shirt leaders were expected to be absent from the ceremony, however, because many are in jail or wanted on terrorism charges for their roles in the two-month-long standoff.
At least 90 people died and nearly 1,900 were injured in the series of clashes between security forces and protesters.
Khattiya rose to prominence during the street protests and antagonised the authorities by expressing loyalty to the former prime minister Thaksin Shinawatra.
The 58-year-old had earlier been suspended from duty in January and faced dismissal from the Thai army after a panel found him guilty of military crimes.
Khattiya was also accused of having a hand in dozens of unsolved grenade attacks in Bangkok.
But he had denied involvement in the protest violence, saying he concentrated on inspecting the barricades of fuel-soaked tyres, bamboo poles and razor wire that he helped to erect around the perimetre of the rally site.