Thailand has "officially recognized the state of Palestine and officially informed all permanent and observer missions to the United Nations in New York of this development," a press officer for Thailand's mission said.
In Ramallah, a Palestinian foreign ministry official told AFP that Thailand was recognizing the state along the lines that existed before the 1967 Six-Day War.
"Thailand's recognition of a Palestinian state is the first of the New Year 2012 and is a new achievement for Palestinian diplomacy," Palestinian foreign minister Riyad al-Maliki told the official news agency WAFA.
Maliki said the announcement brought to 131 the number of countries that recognize a Palestinian state along 1967 lines.
Thailand recognized Israel in 1954 and has historically maintained friendly relations with the Jewish state. The kingdom is a major Israeli vacation destination and the countries have cooperated in agriculture and other areas.
Palestinian president Mahmud Abbas in a statement thanked Thailand for the move and said that procedures would begin to establish diplomatic relations.
"President Mahmud Abbas thanks Thailand's king and government for its official recognition of the Palestinian state," the Abbas statement said.
The Palestinians have sought to boost their international recognition as negotiations with Israel remain stalled over the issue of settlement construction.
In 2011, they won recognition from a slew of countries, as well as membership at the UN cultural agency, UNESCO.
They also presented a bid to join the United Nations as a full member, but Washington threatened a veto and urged negotiations, saying that only a political settlement with Israel would result in a state.