The teachers are demanding better pay, the release of seven people who lead the 2006 protests, and the removal of state governor Ulises Ruiz.
Federal and state officials "are refusing to fulfill ... commitments" they made that helped end the earlier protests, said Ezequiel Rosales, head of the Oaxaca teacher's union.
In November federal security forces moved in to oust the teachers and leftist activists that had occupied downtown Oaxaca for more than five months.
At its peak 70,000 protesters swamped downtown Oaxaca, paralyzing the city.
Thirteen people were killed during the months of unrest. Oaxaca -- capital of a state of the same name -- is considered a World Heritage Site site by the UNESCO.
The protesters will occupy the downtown plaza "for an indefinite time" until their demands are answered, Rosales said.
A rotating group of 7,000 protesters will hold the plaza, Rosales said. The rotations will prevent classes from being interrupted.
Separately in Mexico City, the country's Supreme Court is set to consider a request by local and foreign non-governmental organizations to open a probe on rights abuses during the 2006 protests.