Analysts believe the events that unfolded over the past day will help the junta consolidate power and tilt the odds in favour of coup leader Prayut Chan-O-Cha.
Prayut is standing as premier for the Phalang Pracharat party, a group aligned with the regime.
The military has “gained the upper hand”, said professor Anusorn Unno from Thammasat University, adding that it is poised to perform well in the upcoming vote.
The election on March 24 is the first since the 2014 coup.
Even before Thai Raksa Chart’s reversal, many warned the palace statement had scuttled the princess’ chances.
“The palace disapproval invalidates her candidacy,” said Puangthong Pawakapan, professor of political science at Chulalongkorn University.
Thailand is a constitutional monarchy and has not had a royal run for frontline office since 1932.
The 67-year-old princess did not address the royal rebuke head-on when she thanked supporters on Saturday on her widely followed Instagram account, saying vaguely that she wanted Thailand to “move forward”.
The king did not criticise the princess directly and seemed to focus blame on political party members who brought her on board.
Thai Raksa Chart is aligned with Yingluck and her brother Thaksin, who was ousted by the army in 2006.
Both live in self-exile to avoid charges they say are politically motivated.