Tens of thousands of people are expected to attend the demonstration at the Royal Plaza, the scene of several outbreaks of violence in recent years.
The protest is being organised by the royalist group Pitak Siam, which opposes the government of Prime Minister, Yingluck Shinawatra.
After Cabinet approval, officials plan to enforce the Internal Security Act in three districts of the capital's historic quarter for nine days.
The head of the National Security Council, Paradorn Pattanatabut, says that intelligence reports have warned the rally would be intense, with a huge turnout of protesters.
The Internal Security Law enables the government to prevent the use of certain routes or vehicles, impose a curfew, ban gatherings, carry out searches of buildings and censor the media.
Security officials have rostered nearly 17,000 police to cover the demonstration.
Although there has been an uneasy calm since national elections in 2011, Thailand has been rocked by a series of sometimes violent street protests in recent years.
In 2010, two months of mass opposition protests by "red shirt" supporters of ousted premier, Thaksin Shinawatra, sparked a deadly military crackdown that left about 90 people dead and nearly 1,900 wounded.
The organisers of this Saturday's protest say they expect at least 500,000 demonstrators to attend but authorities estimate about 40,000-50,000 will turn out.
Former Australian military diplomat and Thai affairs expert, John Blaxland, from the Australian National University, has told Radio Australia's Connect Asia program that Pitak Siam is a new version of 'the yellow shirts', a royalist group who were strongly against former Prime Minister Thaksin Shinawatra and his sister Yingluck Shinawatra, the current Prime Minister.
Dr Blaxland says it's hard to gauge the seriousness of this weekend's protest but it's not unreasonable to invoke the Internal Security Act because in the past groups with royalist affiliations such as the yellow shirts or the People's Alliance for Democracy have closed down Bangkok's airport and occupied government buildings: "So there are concerns that they may have tried to seize buildings this time or come up with another plan. There are legitimate concerns about what they might get up to."