"The court has ordered that the party be dissolved," Judge Taweekiet Meenakanit said in the Constitutional Court ruling, which also banned the party's executive board members from politics for 10 years.
Thai Raksa Chart is one of several parties loyal to ousted former prime minister Thaksin Shinawatra in an election that broadly pits his supporters against establishment parties, including one that has junta leader Prayuth Chan-ocha as its prime ministerial candidate.
Opposition parties say Prayuth's candidacy, combined with electoral laws allowing the junta to appoint the 250-seat upper house Senate, could result in an elected government that extends military influence.
Police had deployed more than 1,000 officers in and around the court and cordoned off the surrounding area ahead of the ruling.
Party leader Preechapol Pongpanich, who was visibly emotional, told reporters outside the court the party accepted the ruling. "We all had good intentions for the country," he said.
Supporters were seen crying, saying they would vote instead for other opposition parties.
The Election Commission asked the court to dissolve the party after it nominated Princess Ubolratana Rajakanya Sirivadhana Barnavadi for prime minister, which the commission described as "antagonistic toward the constitutional monarchy".