About 50 rebels wearing uniforms surrounded and attacked a military base, said spokesperson Colonel Pramote Promin.
Between 50 and 60 attackers tried to storm the base under cover of darkness but were repulsed by Thai military.
The insurgents were armed with military-grade weapons, including laser-guided rifles and hand grenades, and the fighting was intense, the colonel said.
The attack was over in 20 minutes, with the toll being lifted in a body count from an initial 17 to a total of 19.
No soldiers are among the dead, according to the army's Internal Security Operations Command, but some were wounded. The shootings took place in the subdistrict of Bacho.
Among the dead was reported to be Maroso Jantarawadee, wanted for several murders in the region, including the recent killing of at least one teacher.
Today's early morning attack was among the heaviest violence in the troubled provinces of Thailand's south, where about 5000 people have been killed in the past eight years.
It's not known at this stage whether the action, which began at 1am with a raid on a military base, has any connection with a warning about possible terrorist action against the US consulate in the northern Thai city of Chiang Mai.
Checks in the international holiday island of Phuket were also intensified, although there has never been any sign of terrorist activity there.
Phuket police commander Major General Chote Chawalwiwat said the island province, popular with foreigners, has gone on the alert.
Locals and business operators on Phuket have been asked to keep an eye out for any suspicious people or movements, with security made more intense at Phuket International Airport and the road checkpoint through which all traffic to Phuket passes.
Phuket Governor Maitree Inthusut chaired a meeting yesterday afternoon at Phuket Police headquarters with all Phuket's senior police. He urged precautionary action.
Southern terrorism has never taken place further north than the city of Had Yai in Songkhla province. Most of the car bombs and killings occur closer to the Malaysian border, in Narathiwat, Yala and Pattani provinces.