The attack came the same day and in the same district as a brutal morning ambush of a commuter van, which was stopped by suspected Muslim insurgents who shot dead eight of its Buddhist passengers execution-style.
Col. Apirat Sangkhao, the police chief in Yala province's Yaha district, described the bombing as "an attempt to pit Muslims against Buddhists."
No one has taken responsibility for either attack.
Thai army spokesman Col. Akara Thiprot blamed the insurgents for the bombing.
"They want to trick people into believing that this is retaliation," he said, referring to the earlier killings of the Buddhists.
"They want to cause divisiveness between people of different religions," he said.
He said the village where the bombing took place was one of the few in the area that didn't cooperate with the insurgents, who otherwise have a strong influence there.
Apirat later said another bomb exploded at a teashop in Yaha, killing one and injuring several others.
In the day's first and only deadly attack, men armed with assault rifles first shot at the driver and then opened the side door of the van and fired at each of the passengers, he said. The driver, who was hospitalized with a gunshot wound to the face, was the only survivor from the morning attack.
"Everyone was shot in the head at close range, execution style," Kitti said.
The van was shuttling people from the Betong district of Yala province to Hat Yai, the south's major city, in the neighboring province of Songkhla. All of the passengers were identified as Buddhists and the driver was Muslim.
Police and soldiers were searching for the attackers, he said.
The attack came as authorities beefed up security for the Tuesday anniversary of the founding of the Barisan Revolusi Nasional, or National Revolution Front separatist group. Police had warned that insurgents might try to mark the anniversary with violence.
The BRN was formed in 1963, partly in opposition to the Thai government's policy at the time of forcing southern Muslims to assimilate into predominantly Buddhist Thai society. The government later changed the policy.
Military officials believed that BRN-Coordinate, a BRN offshoot, has played a vital role in the current violence.
Gen. Montree Sangkhatrap, head of Thailand's Internal Security Operation Command, said heightened security measures would be in effect through March 22. He did not give details of the measures or any specific security threats.
"Certain groups of people have plans to actively instigate violence during this period," he said.
Drive-by shootings and bombings occur almost daily in Thailand's three Muslim-majority provinces — Yala, Narathiwat and Pattani.
Violence has increased since a military-installed government took power in September following a coup that ousted then-Prime Minister Thaksin Shinawatra.
Police, soldiers and Muslims viewed as collaborators with the government, along with Buddhist civilians, are targeted by the insurgents.