Dressed in red shirts emblazoned with the text "More than Thanks", fired up teachers called on the government to offer them more than a three per cent pay rise.
The NSW Teachers Federation is asking for a pay rise of between five and seven per cent to keep up with the cost of living.
The union says more than 20,000 of its members showed up in Sydney's CBD on Thursday.
One of them was Peter Kitonga, 50, a legal studies teacher at Sir Joseph Banks High School in Revesby in western Sydney.
"I have been working as a public school teacher for 13 years and our salaries have not kept up with inflation," he told AAP.
"It's the duty of the government to ensure that students have a qualified teacher in front of them. You can bring teachers on board by giving them better pay."
Most schools have some minimal supervision, but some have closed for the day.
Protesters held up satirical placards poking fun at inflation, such as "Thanks won't buy lettuce", to illustrate soaring living costs.
It is the third teachers' strike in six months, and the first time in 25 years the NSW Teachers Federation and the Independent Education Union NSW/ACT representing Catholic school staff have joined forces.
The unions represent some 85,000 teachers across the state.
The strike is expected to impact about a million families across NSW, a day before a two-week school break.
The Federation's head Angelo Gavrielatos said Premier Dominic Perrottet's unwillingness to negotiate with the union was "failing teachers and ... students".
He described the chronic shortage of teachers on Thursday as "a classroom crisis".
"Thousands of classes are uncovered across the state because of a lack of teachers," he said.
"The premier's three per cent salary cap is a 'take it or leave it' proposition that is far below inflation.
"He is ignoring the evidence that current salary levels are turning people off teaching and a significant increase is urgently required."
Debbie Jones, a Catholic primary school teacher from North Sydney with more than 40 years of teaching experience, said she was worried for the future of her profession.
"Teachers are just running on empty. We're all exhausted," she told AAP.
"There's just not going to be any (teachers) left. Pay teachers what they're worth and they will come," she said.
But Education Minister Sarah Mitchell was disappointed by the decision to strike and said it was politically motivated.
Ms Mitchell defended the government's public sector wages policy, calling it the most generous in the country.
Labour Education spokeswoman Prue Car said the government should address the teacher shortage by lifting wages.
"Teachers are out the front (of parliament) pleading with a government that refuses to listen," she told reporters.
"Our children are suffering in education outcomes because the government refuses to hire teachers."
Meanwhile, the rail union said industrial action will continue this week, despite a verbal commitment from Transport Minister David Elliott to spend $264 million on safety modifications of a Korean-made fleet.
The Rail, Tram and Bus Union has been locked in a long-running stoush with the government over the modifications. Negotiations are continuing on Thursday.
Sydney Trains CEO Matt Longland says the network is operating at reduced capacity, resembling a weekend timetable.
He advised commuters to avoid train travel or allow extra time because services will be less frequent and carriages more crowded.
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