Officials said the move was "not a coup," but an attempt to control unrest after months of clashes between anti-government and pro-government forces left dozens dead and hundreds injured.
"The public do not need to panic but can still live their lives as normal," the army said.
Prayuth warned of army intervention last week, after three anti-government protesters were killed by gunmen.
"If the situation turns more violence it could lead to riots ... The Army will have to use military forces to resolve the situation for peace and order," he said at the time.
Thailand has been torn apart by political frictions between the government and royalist anti-government protesters, who want an unelected interim government to rewrite the constitution.
Tensions escalated earlier this month when Prime Minister Yingluck Shinawatra was ousted by a Thai court, along with several cabinet members.