By Agence France-Presse
The statement in the Royal Gazette from HM King Maha Vajiralongkorn comes almost a week after the country held its first election since a military coup in 2014 installed a royalist junta.
Pheu Thai, a political party linked to Thaksin, is now jostling with the junta-backed Phalang Pracharat for the right to form a government.
The billionaire told AFP in an interview last week that the election was "rigged".
The royal statement said the king "recalls the royal decorations" from the former premier "because Thaksin was convicted by the Supreme Court".
"Moreover, he has fled the kingdom which is extremely inappropriate behaviour."
The ex-premier was stripped of the "illustrious order of Chula Chom Klao", typically bestowed for service to the country.
Thaksin was ousted in a 2006 coup and fled the country in 2008. He was convicted in Thailand on corruption charges.
His sister Yingluck became prime minister in 2011 before being removed in the coup three years later.
King Vajiralongkorn had issued an announcement on election eve calling for Thais to support "good" people to prevent "chaos" -- a declaration replayed right before polls opened on March 24.
The monarch also sent jitters across the country in February after a party linked to the Shinawatras nominated Princess Ubolratana as a candidate for prime minister -- which he swiftly called "inappropriate" in a royal rebuke.
The party was dissolved and its executives barred from political life for ten years.
Thailand is a constitutional monarchy, but the palace holds unassailable powers and is shielded from criticism by a harsh royal defamation law.