The divisive billionaire telecoms tycoon-turned-prime minister, who was toppled by a coup in 2006, sits at the heart of Thailand's bitter political divide and now lives in self-imposed exile to avoid jail on a corruption charge.
Today the foreign ministry said it was asked to take action against Thaksin after police deemed that "part of his interview endangered national security or national reputation".
It was not immediately clear which interview was being referred to. But last week Thaksin made rare public comments in overseas interviews, including to CNN and to Korean television after a public appearance in Seoul, as the Thai military marked a year in power.
Under Section 112, anyone convicted of insulting the king, queen, heir or regent faces up to 15 years in prison on each count.
Thai-based media routinely self-censor to avoid breaching the draconian legislation, under which repetition of the alleged offence could itself break the law.
Deputy Prime Minister Prawit Wongsuwan confirmed police had initiated action against Thaksin.
"Police are investigating this case and proposed to the foreign ministry to cancel his passports... His remarks (Thaksin's) were detrimental to the state and the monarchy," he told AFP.
Since going into self-imposed exile Thaksin has travelled frequently and has been based in Dubai.
It was not immediately possible to confirm the impact the move would have on his ability to travel but he is also believed to hold passports from other countries.
Last May Thailand's generals ousted the government of Thaksin's younger sister Yingluck in a coup shortly after she was removed as premier by a controversial court ruling.
Parties led by or aligned to the Shinawatras have won every election since 2001, and they are loved in the nation's rural north for their populist policies.
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