The explosion left body parts strewn across the streets of a neighbourhood full of five-star hotels and upscale shopping centres, the officials added.
Bangkok has been relatively peaceful since a military coup ousted a civilian government in May last year after several months of sometimes violent political protests against the previous government.
The area the Erawan Shrine is filled with hundreds of tourists, office workers and shoppers at any given time. Police said the bomb was made from a pipe wrapped in cloth.
"Whoever planted this bomb is cruel and aimed to kill," said national police chief Somyot Poompummuang. "Planting a bomb there means they want to see a lot of people dead."
The shrine is at a major intersection that was the centre of many contentious political demonstrations in recent years - raising questions about whether the bombing was politically linked. But police said it was too soon to determine the attack's motive.
Security video showed a powerful flash as the bomb exploded at around 7pm local time.
At least 18 people were confirmed dead and 117 injured, according to the Narinthorn emergency medical rescue centre.
The dead included Chinese and a Filipino, Mr Somyot said.
Anusit Kunakorn, secretary of the National Security Council, said prime minister Prayuth Chan-ocha, the former army chief who orchestrated the May 2014 coup, was closely monitoring the situation.
"We still don't know for sure who did this and why," deputy prime minister Prawit Wongsuwon told reporters. "We are not sure if it is politically motivated, but they aim to harm our economy and we will hunt them down."
Although Bangkok has seen a period of relative calm since last year's coup, there has been some tension in recent months, with the junta making clear that it may not hold elections until 2017 and wants a constitution that will allow some type of emergency rule to take the place of an elected government.
Stirring the pot has been former prime minister Thaksin Shinawatra, who was ousted in a 2006 coup and fled the country to avoid a corruption conviction.
Last week, Thaksin posted a message on YouTube urging his followers to reject the draft constitution because he said it was undemocratic. The draft charter is supposed to be voted on next month by a special National Reform Council. If it passes, it is supposed to go to a public referendum around January.
Another source of recent tension is the annual military promotion list, with the junta's top two leaders - Mr Prayuth and Mr Prawit - widely believed to be supporting different candidates. The reshuffle, which comes into effect in September, has traditionally been a source of unrest, as different cliques in the army, usually defined by their graduating class in the military academy, seek the most important posts to consolidate their power.
While bombings are rare in Bangkok, they are more common in southern Thailand, where a Muslim separatist insurgency has been flaring for several years. Thailand is predominantly Buddhist, but the three southern provinces where the insurgency has flared are Muslim majority.
The last major bombings in Bangkok occurred on New Year's Eve at the end of 2006, when a series of bombs at celebrations around town killed at least three people and wounded dozens. Those bombings occurred just three months after the coup that ousted Thaksin, and there was speculation that his supporters carried out the attacks in revenge. However, the bombings were never solved.
The 2006 coup set off a battle for power among Thaksin's supporters and opponents, sometimes in the form of violent protests.
Protesters from both sides sometimes faced armed attacks by unknown groups, with more than 90 people killed in 2010 during pro-Thaksin demonstrations that were quashed by the army. The focus of the 2010 protests was the same intersection where Monday's blast took place, a bustling area in the heart of Bangkok's main shopping district. Several five-star hotels are nearby.
In March this year, several arrests were made in connection with a grenade that was tossed at Bangkok's Criminal Court. Those detained were apparently sympathisers of the pro-Thaksin Red Shirt movement. Critics of the current military government say some of the bombings may have been carried out by the junta to justify its continued suppression of basic rights and liberties. The government denied that.
In April, a car bomb exploded at a shopping centre on the resort island of Samui, injuring seven people. The motive was unclear, though the government suggested it was linked to politics.
The Erawan shrine is dedicated to the Hindu god Brahma, but is extremely popular among Thailand's Buddhists as well as Chinese tourists. Throngs of tourists come there to pray at all hours, lighting incense and offering flowers purchased from rows of stalls set up on the pavement along the shrine. The site is a hubbub of activity, with quiet worshippers sometimes flanked by Thai dancers hired by those seeking good fortune, while groups of tourists shuffle in and out.
In March 2006, the shrine was vandalised by a man who smashed the statue of the four-headed Brahma with a hammer. The man, believed to be mentally ill, was lynched by bystanders. A new Brahma statue was installed at the shrine within months, and was not damaged in Monday's blast.
Brahma is the first god in the Hindu trinity and is said to be the creator of the universe. The other two gods are Vishnu, the preserver, and Shiva, the destroyer. Although Thailand is predominantly Buddhist, it has enormous Hindu influence on its religious practices and language.