The Election Commission released the official list of parties' candidates for prime minister without the name of Princess Ubolratana Rajakanya Sirivadhana Barnavadi, 67, the king's elder sister.
The political hopes of the princess were dashed nearly immediately when her younger brother, the king, issued a terse statement saying his sister's candidacy was "highly inappropriate" and went against tradition and national culture.
Members of the royal family should be "above politics" and therefore can not "hold any political office", the commission said in a statement, echoing the wording of a public statement from the king on Friday.
She returned to Thailand in 2001 from the USA after her divorce and has since regularly taken part in charity, social welfare and health-promoting events as well as anti-drug campaigns for youths.
The March elections will mark the first vote since the coup.
The military deposed Thaksin in 2006 and, since then, Thai politics have been locked in a cycle of his allies winning elections and later being ousted from power by court rulings or coups - most recently in 2014, when the army overthrew the remnants of a government that had been led by Thaksin's sister Yingluck.
Broadcast on all Thai TV networks, the statement said: "Even though she has relinquished her royal titles in writing, she maintained her status and carried herself as a member of the Chakri dynasty".
He however denied any involvement in last week's nomination of Princess Ubolratana as a candidate for prime minister.
Thailand's monarchy is deeply revered in society, and has been seen as a unifying force above the divisions in the country.
Shortly after the king's statement she posted again without addressing the issue directly, simply thanking Thais for their support and saying that she wanted Thailand to "move forward and become admired and accepted by the worldwide community". Among the candidates for prime minister is the current junta leader Prayuth Chan-ocha, who as army chief led the coup.
Party leaders were not immediately available for comment and cancelled a press conference planned for Monday.
A spokesman for Thai Raksa Chart said the party "graciously accepts" the King's reservations and will follow "the royal command with loyalty to the king and all members of the royal family".
The party, a second to the Thaksin political powerhouse Pheu Thai, was expected to help the Shinawatra machine secure a majority in the 350-seat lower house.
His movement has won every democratic election in Thailand since 2001, but Thaksin and his sister live as exiles outside the country on corruption and other charges they say are politically motivated.
The general election had been viewed as a two-party contest between Mr Prayuth's royalist military government and the pro-Thaksin Thai Raksa Chart.