Police were notified of the incident at 23:30 local time (16:30 GMT) on Friday.
The Umpang rescue team said in a statement that the explosive was thrown at the foot of an outdoor stage where festivalgoers were dancing.
Some of the injured were taken to nearby hospitals, he added.
According to several reports, the explosion was caused by an improvised explosive device (IED).
Photos taken of the aftermath shared by rescue teams showed debris strewn across the ground in the lit festival area.
Prime Minister Patongtan Shinawatra expressed condolences to the families of the dead and injured in the bombing through a post titled X.
She said she had instructed police and security agencies to investigate the cause of the explosion and help those affected. She also ordered an increase in police officers to supervise all festive events.
According to the Bangkok Post, this year’s week-long festival was attended by 8,000 to 9,000 people, and the attack occurred on the penultimate night of the event.
Umphang is the southernmost region of Tak Province in northern Thailand, bordering Myanmar to the west.
