Gun-toting troops fanned out after martial law was declared in a dawn broadcast, as General Prayut Chan-O-Cha exploited century-old legislation that confers far-reaching powers on the armed forces to act in an emergency.
But he left the caretaker civilian government in office and later invited the country's warring political factions to sit down for talks, as the United States, the EU, Japan and Southeast Asian neighbours urged Thailand to stay on a democratic track and resolve its differences peacefully.
Read: Thailand under martial law and what it means
A Thai soldier jumps off a military truck after arriving at a pro-government rally site on the outskirts of Bangkok, Thailand Tuesday. (AP Photo)
Soldiers and military vehicles were seen in the heart of the capital's retail and hotel district. Troops were also positioned at TV stations where broadcasts were suspended under sweeping censorship orders, although regular Thais appeared largely unfazed.
The dismissal of prime minister Yingluck Shinawatra earlier this month in a controversial court ruling has stoked tensions in the kingdom, which has endured years of political turmoil.
"Red Shirt" supporters of Yingluck and her brother Thaksin Shinawatra, who was deposed as premier in a 2006 coup, have warned of the threat of civil war if power is handed to an unelected leader, as opposition protesters demand.
Thaksin, who lives abroad to avoid a jail term for corruption, said on Twitter that the imposition of martial law was expected but must not "destroy" democracy.
The backdrop is a nearly decade-long struggle pitting a royalist establishment -- backed by parts of the military, judiciary and Bangkok-based elite -- against Thaksin's billionaire family, which has traditionally enjoyed strong support among poor and rural voters in the north.
New York-based Human Rights Watch branded the imposition of martial law a "de facto coup", voicing alarm at the impact on freedom of expression.
Read: Selfies abound as Thailand declares martial law
An anti-government protester holds Thai flags during a rally near the Government House in Bangkok. (Reuters Photo)
'Situation not normal'
It was not immediately clear how the intervention of the generals -- traditionally seen as staunch defenders of the monarchy -- would affect the balance in the long-running power struggle.
The government officially remained in office, and General Prayut presented himself as a mediator.
"We are in the process of inviting both sides to talk but at the minute the situation is still not normal... that's why I have had to invoke martial law," he told reporters.
"The military will not tolerate any more loss of lives."
Martial law allows the army to ban public gatherings, restrict people's movements, conduct searches, impose curfews and detain suspects for up to seven days.
Thailand has been without a fully functioning government since December, disrupting government spending, spooking investors and deterring foreign tourists.
The United States, a key ally of Thailand, said the use of martial law must be temporary and urged all parties "to respect democratic principles".
Southeast Asia's second-biggest economy is sliding towards recession and Japan, whose companies have some of the biggest foreign investment in Thailand, also expressed "grave concerns" at the unfolding crisis.
Caretaker Prime Minister Niwattumrong Boonsongpaisan, who replaced Yingluck, called for fresh polls on August 3 to cut through the political quagmire, urging election authorities to help craft a decree for the king's endorsement next week.
But the protesters say they will not stomach new polls without widespread reforms to weaken Thaksin's influence on Thai politics.
A soldier sits beside a machine gun mounted on a military vehicle after the Thai army took their positions in central Bangkok. (Reuters Photo)
'No need to panic'
The early-hours announcement on military-run television said martial law had been invoked "to restore peace and order for people from all sides" after nearly seven months of protests that have left 28 people dead and hundreds wounded.
"This is not a coup," it said. "The public do not need to panic but can still live their lives as normal."
Despite the assurances, concerns a military takeover was under way were fuelled by the troop presence and strict censorship of media in the interests of "national security".
"I think what we are looking at is a prelude to a coup. That is for sure. It is all part of a plot to create a situation of ungovernability to legitimise this move by the army," said Pavin Chachavalpongpun from the Centre for Southeast Asian Studies at Japan's Kyoto University.
Anti-government demonstrators vowed to remain on the streets.
"We will still keep fighting -- we have not won at all," their firebrand leader Suthep Thaugsuban said at a rally late Tuesday.
Thai military police officers walk outside the National Broadcasting Services of Thailand (NBT) building. (AP Photo)
His movement forced the annulment of elections in February and is pressing the Thai upper chamber to invoke the constitution to dump the caretaker government and appoint a new premier.
It is unclear what legal basis they are drawing on.
Some 25 senators signed a petition Tuesday urging the interventionist Constitutional Court to move against the cabinet.
But on the streets of the capital, where a military crackdown on pro-Thaksin Red Shirts protests in 2010 under the previous government left dozens dead, life mostly went on as usual.
Thais have become accustomed to political upheaval, although there was some confusion and nervousness over how the crisis will unfold.
"Whether martial law will be helpful or not I can't say because it's only the first day," said Chitra Hiranrat, 49, as she waited for a motorcycle taxi to go to work.
Watch: Thailand's military declares martial law