Just as they had been born 25,000 years ago, the Sith were born again in the halls of the Jedi Council. This happened 1000 years before the events of Episode I.
It began when an unknown, lackluster Jedi began to discover the power of the dark side. He was shunned by the Council and forbidden to continue his study of the dark side. He eventually left the Order and was able to take other Jedi with him, convincing them that the council was holding them back. After a short while and a few more defections the new Sith order had grown to fifty sworn Lords.
As time passed, the new Sith Order recruited an army of minions and declared war on the Jedi Order. The war was brutal but short and played out over several small battles. In the end, the Sith who were responsible for their own defeat. The infighting, poor organization and endless power struggles destroyed the Sith Order from the inside.
The final battle of the New Sith War took place on the planet of Ruusan. The Jedi backed the Sith Lords into a cavern and were only minutes away from ending the war. In the final moments of the battle, the Sith Lord Darth Bane was arguing with another Sith Lord about the best way to turn the tide of the battle. He had a plan, but so did the others. Bane was betrayed in the heat of battle by a Sith Lord named Kaan and this resulted in the massacre on Ruusan. Kaan detonated a bomb that killed all the Jedi and all the Sith Lords save one, Darth Bane. The Jedi felt they had finally wiped out the Sith. They were careful to guard all of their secrets and closely monitored students who showed dark side tendencies. After thousands of years of war and mistakes, the Jedi were determined to never again let the Sith rise.
Darth Bane, the sole surviving Sith Lord, slipped away into the shadows. Bane reformed the Sith doctrine and founded what is known as the modern era of the Sith. Now there are only two Sith at a time -- a master and an apprentice. They bide their time, work from the shadows pass the Sith tradition down from master to apprentice and wait for the day they will have their revenge.