"The funeral is a time for mourning, but it's also a time to show solidarity," said Pongsak Phusitsakul, a provincial protest leader who attended with other red shirts from his province.
Nearly 90 people were killed, most of them protesters shot by soldiers, and more than 1,400 injured before security forces drove them from the enclave in downtown Bangkok they had occupied for weeks.
At least 800 policemen, including bomb squads, riot police and undercover officers, were deployed in and around the temple.
Khattiya, better known as "Seh Daeng", was singled out by the government as the leader of a hard-line wing of the red shirts and a key organiser of rudimentary bamboo-and-tire defences around the area they occupied.
Thai police have yet to identify a suspect in his killing, Prompong Nopparit, a spokesman for opposition Puea Thai Party, said at the funeral.
The government claimed that the use of force was necessary to combat so-called "men in black", armed red shirts believed to be trained by Khattiya.
Khattiya, 58, rose to prominence during the street protests and antagonised the authorities by expressing loyalty to Thaksin Shinawatra, the former Thai prime minister.
He 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.