DDfE was envisioned as a "less extreme" Pegida, said founder Kathrin Oertel, who left the Patriots Against the Islamisation of the West (Pegida) two weeks ago following the Hitler photo scandal involving the group's former leader.
"We're starting all over again," Oertel told the crowd who had gathered in front of Dresden's Frauenkirche.
The DDfE also launched its platform, which advocates for freedom of expression and better internal security, as well as a reform of immigration and asylum laws. DDfE is moving away from the anti-Islam stance that has come to define its predecessor.
Oertel also announced that DDfE would meet every two weeks, but never on Mondays, saying that day would remain "Pegida day" in Dresden.
Oertel also expressed regret that Pegida had become a platform for the right-wing extremist political party, the National Democratic Party (NPD), while also stating that she hopes her new group will become a "voice for the people".
The new leader also made a move to make amends with the press, saying she had been disgusted by Pegida's adoption of the term Lügenpresse or lying press.
Pegida back in business?
On Monday, Pegida is expected to meet again after a two-week hiatus brought on by a massive split in the group, which led to Oertel and four others in the Pegida organising team cutting ties with Pegida.
The conflict came from a decision as to how much involvemnt Lutz Bachmann, Pegida's founder, should be able to have following allegations that he referred to immigrants as "cattle" and "trash" in a conversation on Facebook.
Bachmann also posted a picture of himself styled as Hitler in tribute to the satirical novel, "Look Who's Back", which sees the Nazi leader take a stroll around Berlin's Mitte district 66 years after the end of the Second World War.
Pegida plans to also gather in Dresden's Altmarkt in front of the Frauenkirche and has registered a demonstration with 5,000 participants.
No demo for Leipzig
Meanwhile, the Leipzig offshoot, Legida, has been banned from marching due to the movement overwhelming available police at previous demonstrations, the Saxon city's mayor told MDR broadcaster on Monday.
"We cannot guarantee the city's safety with 1,000 police officers," Mayor Burkhard Jung said, after banning the demonstration planned for this Monday evening.
The move has created a debate in the German parliament, with politicians from Die Linke (The Left) and the right-of-centre Christian Democratic Union (CDU) saying Jung's prohibition impeded on the constitutional right to gather.
Legida has also been blighted by lower-than-expected turn out and the demonstrations, unlike those in Dresden, have seen violence as demonstrators attacked police and journalists.