Coppergate in York can only be used by buses, taxis and permit holders between 08:00 and 18:00.
Drivers breaking the rules will receive a penalty notice of up to Â£60.
In 2015, City of York Council was forced to pay back fines after a tribunal ruled errors in the signs on Coppergate meant the restrictions were not enforceable.
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Penalty notices totalling more than Â£385,000 which were given to 12,000 drivers in Coppergate were refunded after the council abandoned the scheme in 2014, less than a year after it was introduced.
Automatic Number Plate Recognition (ANPR) cameras will be used to enforce the new restrictions while the previously criticised signage has been improved.
Drivers who enter the restricted area will be sent warning letters for the first two weeks of its operation.
After that, a letter will be sent for a first offence, with a fine for a second one.
From July, all offences will attract an immediate fine.
Conservative councillor Ian Gillies said the scheme was designed to enforce traffic restrictions in place on Coppergate since the 1960s which were "only enforced infrequently".
He said: "The reintroduction of the restriction along with a substantial amount of clearer and more robust signage will hopefully help reduce the number of people wrongly entering the street and help traffic to flow better in the area.
"This will hopefully in turn help the city's bus services to run more efficiently."
Traffic restrictions previously deemed "unenforceable" have been reintroduced on a city centre street.