Khattiya Sawasdipol, a key Red Shirt protest strategist also known as Seh Daeng, had been suspended from his army post and had enemies in both the government and Red Shirts.
He is now in a coma after being shot as he gave an interview to a New York Times reporter and to other journalists.
Several other people were also injured and one protester was shot dead as violence escalated in the Thai capital.
The clashes flared when protesters threw rocks at troops, who replied with rubber bullets followed by live ammunition, as the two sides fought each around the Red Shirts’ sprawling encampment in the retail heart of Bangkok.
Police said an unknown number of people were taken to hospitals in the area. Blood was splattered on the street near the shooting.
It is unclear who was doing the shooting, which came hours after the government announced it would seal off the protest site in the capital’s main shopping district with troops and armoured vehicles.
The government is attempting to seal off the Red Shirts encampment to stop people from getting in, although troops have yet to move in en masse.
Thailand has also added 15 provinces to the existing state of emergency.
Seh Daeng, accused by prime minister Abhisit Vejjajiva of trying to prevent an end to the two-month protest, has made no secret of encouraging the Red Shirts to oppose a reconciliation deal.
“It’s important that I’m here. Everyone is here because Seh Daeng is here,” he said earlier in the day during an interview within the protest site. ABC/AFP