At 2:30pm, investigators were called to the scene where two children drowned in the Son canal 800 metres from Nopparat Thara Beach, near Ao Nang.
Rescuers spent over an hour underwater searching for the children, and finally brought the body of Wimwipa Keawyai, 14, up from the water.
Rescuers are still searching for the brother, Wongyut, 12, but fear the worst.
Maliwan Keawyai, 40, mother of the victims, collapsed on the sand sobbing when she saw the lifeless body of her daughter.
Wisut Keawyai, 42, father of the victims, said he took his family to Nopparat Thara Beach to celebrate Children's Day.
"We had a picnic on the beach while the kids played with their friends in the water. An hour later, the friends ran back in a panic to tell me my kids were drowning," said Mr Wisut.
Rescuers said that many tourists drown in this area.
Police said they assume that children play in the Son canal because they are unaware of the depth and how strong the current is. This is how the boats get in and out of the shore.
"Both children must have been swept away by the strong current to a deeper area before they drowned,” police concluded.