The commission released the official list of parties' candidates for prime minister on Monday without the name of Princess Ubolratana, the older sister of the king.
Thai Princess Ubolratana was on Monday formally disqualified for running for prime minister, ending her brief and ill-fated political union with a party allied to the powerful Shinawatra clan, just days after a stern royal command rebuking her candidacy was issued by her brother, the king.
The decision brings to an end a weekend of feverish speculation in Thailand after two remarkable events on Friday.
Uncertainty and conjecture have coursed through Thailand since Friday when the Thai Raksa Chart party made the explosive announcement of Princess Ubolratana, King Maha Vajiralongkorn's elder sister, as their candidate for premier after the March 24 election.
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".
The Electoral Commission hinted that it would consider banning the Thai Raksa Chart party.
The EC rejected TRC's candidate on grounds that royal family members are above politics and can not hold political positions.
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 commission is likely to follow the wishes of the monarch, who holds a semi-divine place in Thai society.
Thai Raksa Chart's Executive Chairman Chaturon Chaisaeng declined to comment on Sunday on the request to disband the party.
Prime Minister, army general Prayut Chan-o-cha, - who is preparing for the first elections since he took power in a 2014 military coup - dismissed the rumours as 'fake news'.
Mr Prayut overthrew the democratic government of Yingluck Shinawatra, the younger sister of former Prime Minister Thaksin Shinawatra.
Parties loyal to former telecommunications tycoon Thaksin have defeated pro-establishment parties to win every election since 2001, but since 2006 each of their governments have been removed by court rulings or coups.
"Involvement of a high ranking member of the royal family in politics, in whatever way, is an act that conflicts with the country's traditions, customs, and culture, and therefore is considered extremely inappropriate".
If the party is dissolved, it could give more seats to anti-Thaksin affiliated parties, he said, although there are other parties loyal to the former prime minister contesting the election.
Thaksin has lived in self-imposed exile in England since he was deposed.