The paramilitaries were on their way to attend a colleague's funeral in Pattani province when suspected militants detonated the bomb -- hidden in a motorcycle -- and launched a gun attack, police said.
On Friday a bomb had killed a soldier and wounded 14 others in neighbouring Narathiwat province.
Several shadowy groups are waging an insurgency in Thailand's southernmost Muslim-majority provinces bordering Malaysia that has claimed more than 5,500 lives over the past nine years.
Thailand's government held a one-day meeting with representatives of the Barisan Revolusi Nasional (BRN) insurgent group in Malaysia's capital on Thursday.
The two sides agreed to meet again on April 29, according to the Thai delegation, which said that while no breakthroughs had been achieved the talks had managed to build trust.
But experts say questions remain over the ability of older militant leaders to rein in attacks by an increasingly ruthless and well-organised younger generation.
Thai National Security Council chief Paradorn Pattanatabut said on Friday that about 20 percent of the militants were believed to oppose the peace dialogue.
There is near-daily violence in southern Thailand including bombings, ambushes and even beheadings, but little is known about the various militant groups' identities, structures or aims.