Prime Minister Prayuth Chan-ocha, who also announced his candidacy the same day as Princess Ubolratana did, will be running for the post as a representative for a new pro-military party established by his loyalists.
"All members of the royal family must abide by the king's principle of staying above politics, maintaining political impartiality and they can not take up political office", part of the statement released to the media said.
Thailand's Election Commission will consider on Monday the surprise nomination of a Thai princess as a prime ministerial candidate for March elections after her brother, King Maha Vajiralongkorn, called it "inappropriate" and unconstitutional.
Ubolratana Mahidol has filled many roles in her 67 years, from Thai princess and royal rebel to Californian mother, pop singer, film actress, charity worker and flamboyant social media celebrity.
Thailand has not had a royal as premier since becoming a constitutional monarchy in 1932.
Upon Princess Ubolratana's permanent return to Thailand after her divorce in 1998, she was "bestowed the title "Tunkramom Ying" (Daughter to the Queen Regent) title", and has since been "treated by officials as a member of the royal family".
Shortly after the king's statement she posted again without addressing the issue directly, simply thanking Thais for their support and saying that she wanted Thailand to "move forward and become admired and accepted by the global community".
Thailand will hold elections on March 24, the first since a 2014 military coup.
The nomination of the king's older sister, who has starred in soap operas and an action movie was a shocking move.
The princess was put forward by the Thai Raksa Chart party, steered by the divisive Shinawatra political clan, backed by Taskin Shinawatra - the former owner of Manchester City football club.
Srisuwan said his complaint to the Election Commission would ask it to recommend that a Constitutional Court dissolve the party.
'The board agrees that the name of Princess Ubolratana, an educated and skilled person, is the most suitable choice, ' Thai Raksa Chart party leader Preechapol Pongpanich told reporters. Prayuth was the Thai army chief in 2014 and led the coup that ousted a government led by Thaksin's sister.
The pro-Thaksin camp's bid to nominate a member of the royal family electrified the election race, but it could backfire on Thai Raksa Chart, said Titipol Phakdeewanich, a political science professor at Ubon Ratchathani University.
Thaksin, himself removed in a coup in 2006, lives in self-imposed exile after being convicted by a Thai court of corruption in absentia.