At least 10 insurgents opened fire on the chief's vehicle, killing him and three security guards, as they drove through Bannang Sata district in Yala province, said police Lt. Sompien Eksomya.
"The village chief was beheaded and his severed head was found near the crime scene and the rest of the bodies," Sompien said.
More than 2,600 people have been killed in Thailand's Muslim-majority southernmost provinces of Pattani, Yala and Narathiwat, and in some parts of neighboring Songkhla, since a long-simmering Islamic separatist insurgency flared in January 2004.
The Southeast Asian nation's population is about 90 percent Buddhist and many southern Muslims feel they are treated as second-class citizens.
Despite government efforts to suppress the rebels, they carry out drive-by killings and small-scale bombings almost daily, apparently in an effort to terrorize Buddhist residents into leaving the area. Muslims whom insurgents consider government collaborators are also frequent targets, including security forces, teachers and informants.
Although the attack came just days ahead of Sunday's general election, police said the village chief was not running in the poll or campaigning on behalf of any candidate. Violence against candidates is rare, but campaign workers are sometimes targeted.
The Election Commission has requested an additional 4,000 soldiers to guard polling stations and the roads that lead to them in the south, said army spokesman, Col. Akara Thiprote. The soldiers will bolster a force of 16,000 troops already in the far south, he said.
Some 200,000 police and soldiers will be deployed nationwide to ensure security during polling Sunday.