Police say a gang of six or seven men, dressed in camouflage outfits, stormed a house in the southern province around 4:00 pm (0900 GMT) on Monday.
They took ten people hostage and waited for the owner of the property to return.
"Around 8pm the owner arrived, all of them (the victims) were handcuffed and blindfolded until midnight when gunmen opened fire," Chaiwut Buathong, chief of Ao Luek district, told AFP.
Six died at the scene, two others died in hospital, Chaiwut said, adding three of the victims were girls aged under 15.
Three others were taken to hospital with one in critical condition.
Deputy national police spokesman Krissana Pattanacharoen told reporters the victims came from a local Muslim family and that the gunmen "claimed to be officials who wanted to check on illegal activity".
Photos taken by medical workers showed two bodies slumped on a blood-splattered children's bed, with a teddy bear thrown to one side.
Firearm ownership is common in Thailand and the country boasts one of the highest gun-related homicide rates in Asia.
Petty arguments and disputes frequently turn deadly but mass organised killings are rare.
Krabi province is a popular holiday destination boasting beaches like Ao Nang and Rai Ley, though Monday's killings took place in an area removed from the main tourist drags.
The province boasts a large Muslim community who have lived in the region for centuries.
They are Thai speakers and ethnically different from the Malay-speaking Muslims in the country's three southernmost provinces where a violent nationalist insurgency has raged against the central government for more than a decade.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)