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Loi Krathong takes place on the evening of the full moon of the 12th month in the traditional Thai lunar calendar. In the western calendar this usually falls in November.

"Loi" means "to float" and a "krathong" is traditionally made from a section of banana tree trunk. Modern krathongs are more often made of bread or styrofoam. A bread krathong will disintegrate in a few days and be eaten by fish and other animals. The traditional banana stalk krathongs are also biodegradable, but styrofoam krathongs are frowned on, since they are polluting and may take years to disappear. Regardless of the composition, a krathong will be decorated with elaborately-folded banana leaves, flowers, candles and incense sticks. A low value coin is sometimes included as an offering to the river spirits.

During the night of the full moon, Thais will float their krathong on a river, canal or in the sea. The festival is believed to originate in an ancient practice of paying respect to the spirit of the waters. Today it is simply a time to have fun.

Governmental offices, corporations and other organizations usually create big decorated rafts. There are also local and officially organized raft competitions, regarding its beauty and craftsmanship. In addition, there are also fireworks and beauty contests during the celebration of the festival.