"It's great to be back in Richmond - one of America's greatest cities," McAuliffe told the crowd of a couple hundred Democratic supporters.
McAuliffe was joined by Richmond Mayor Dwight Jones and Senator Tim Kaine.
McAuliffe spoke on his policy visions for the Commonwealth, which include more transportation improvements, education standard reforms and restoration of voting rights for felons.
McAuliffe introduced his wife Dorothy, and in what seemed like an off the cuff moment, remarked "Can you imagine being married to me for 25 years?"
McAuliffe's announcement comes on the heels of Washington Post Poll data released over the weekend that says McAuliffe is trailing presumptive Republican nominee Ken Cuccinelli,46 to 41 percent.
However, of the Virginia voters polled, less than ten percent say they are following the race closely.
"It is oddly reminiscent of some polls I have had in my past," Democrat Senator Tim Kaine told political reporter Joe St. George.
Kaine did concede that Democrats must rally their base.
"I think we do have to work hard to get a good turnout," Kaine added.
Cuccinelli has the support of 95 percent of all Republicans according to the poll, a sign Republicans may have the enthusiasm advantage early in the race.
Cuccinelli will hold a major policy press conference Tuesday in Richmond at the Sweet Frog in Carytown.
In response to the McAuliffe Richmond launch, Cuccinelli spokesman Anna Nix sent the following statement.
"Ken Cuccinelli looks forward to contrasting his record of fighting for middle class families be it through lower taxes, greater government accountability and access to more and better jobs- versus Terry McAuliffe's jobs failures starting with Greentech automotive and Franklin pellets. Making matters worse, McAuliffe has a long record of supporting tax increases on voters in the Commonwealth including the estate tax that even Tim Kaine opposed."