Crowds gathered in Tahrir Square hours before the protests were due to begin
Tens of thousands of Egyptians are expected to join protests in Cairo's Tahrir Square on the first anniversary of the uprising which culminated in the toppling of President Hosni Mubarak.
The head of the ruling military council has announced the decades-old state of emergency will be lifted partially, but still apply to cases of "thuggery".
The first post-Mubarak elections returned a parliament dominated by Islamist parties.
Mr Mubarak is currently on trial.
He is accused of ordering the killing of demonstrators during last year's unrest. He denies the charges.
Tents and slogansAnalysis
The authorities have built huge concrete barricades around Tahrir Square in order to control the crowds.
The opposition say they want an immediate end to military rule, complaining that the old regime is still in power. But the largest political force in Egypt, the Muslim Brotherhood, are still celebrating taking their seats as the biggest party in the new parliament.
They are now in detailed behind the scenes negotiations with the military for a peaceful transfer of power later this year.
So it's by no means certain whether this new protest will lead to confrontation, or just mark a celebration of the power of the Egyptian people.
By Tuesday night, thousands of protesters had already gathered in Tahrir Square, the epicentre of last year's demonstrations.
They put up tents and chanted slogans against the Supreme Council of the Armed Forces (Scaf), which took power last February after Mr Mubarak stepped down.
"The Egyptian army killed us in Tahrir and I am not afraid to say it," demonstrator Khaled Abdallah told the Reuters news agency.
"The army and police murdered us and cut off the revolution's voice; but I am telling you now, the revolution's voice will not be silenced," he said.
An end to the state of emergency was a key demand of the protesters. During his nearly 30 years in power, Mr Mubarak had repeatedly promised to lift the decree and then failed to do so.
Egypt has been governed under emergency law almost continuously since 1967.
However, Scaf chairman Field Marshal Mohamed Hussein Tantawi said the emergency law would still be applied in cases of "thuggery", without giving any details.
The military has used the term "thugs" to justify the crackdown on people demanding a return to civilian rule.
Last year, the generals widened the scope of the emergency law to include labour strikes, traffic disruption and spreading false information.
Meanwhile, the newly elected parliament met for the first time on Monday since elections - which took place over several months - returned an Islamist majority.
The Freedom and Justice Party (FJP) of the Muslim Brotherhood - banned under Mr Mubarak - holds the largest number of seats.
The session began with a moment of silence for those killed in the anti-Mubarak protests.
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