Some 18 women reported having been groped by up to 10 individuals on Innsbruck's main square where around 25,000 gathered to ring in 2017, senior police official Ernst Kranebitter said.
"We've not had anything like this happen here before," Kranebitter told AFP.
"They were dancing around the victims and then suddenly grabbed their breast or stuck their hands between their legs. That's what made it hard for others to notice what was going on -- it all happened amid festivities."
The suspects have been described as being in their late teens, said Kranebitter.
Amateur video footage of the incidents has so far failed to help investigators identify the suspects because the image quality was too poor.
The assault came a year after hundreds of women were mugged and groped in a crowd of men of mainly Arab and north African appearance in the German city of Cologne on December 31.
To avoid a similar incident, police in Vienna distributed 6,000 pocket alarms on New Year's Eve last week to help prevent attacks.
Police presence had been boosted across Austria, including in Innsbruck, for the end-of-year festivities in the wake of a terror attack in neighbouring Germany in early December.