Police described the two as a 23-year-old woman from Great Yarmouth, Norfolk, and a 24-year-old man from Jersey, Channel Islands.
Their bodies were discovered early Monday on a beach on Koh Tao, a small island known for its diving sites and serene beaches, police said.
A bloodied hoe was found near the bodies and is believed to have been used as the murder weapon, police Col. Prachum Ruangthong said.
"The man was chopped in the back and on the side of his head, while the woman was chopped in her face," he said. "It's very gruesome."
Investigators were also looking for witnesses who might know if the pair attended a nearby late-night beach party that attracted tourists.
Local media reported that outraged residents of the island, which is home to about 2,000 people and survives on tourism, had blockaded its piers to help police prevent the killers from escaping.
The attack came amid government efforts to revive Thailand's tourism industry after a military coup in May ended prolonged, sometimes violent political protests. Martial law remains in effect.
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