Magento On sale product listing by category

1-Create a new CMS page with content set to…

{{block type="catalog/product_list" template="onsale/sale.phtml"}}

2- and a template for listing your products
 app/design/frontend/default/YOUR_THEME/template/inchoo/onsale/sale.phtml

<?php
$_productCollection = Mage::getModel('catalog/product')->getCollection();
$_productCollection->addAttributeToSelect(array(
                                   'image',
                                   'name',
                                   'short_description'
                   ))
                   ->addFieldToFilter('visibility', array(
                               Mage_Catalog_Model_Product_Visibility::VISIBILITY_BOTH,
                               Mage_Catalog_Model_Product_Visibility::VISIBILITY_IN_CATALOG
                   )) //showing just products visible in catalog or both search and catalog
                   ->addFinalPrice()
//                        ->addAttributeToSort('price', 'asc') //in case we would like to sort products by price
                   ->getSelect()
                   ->where('price_index.final_price < price_index.price')
//                        ->limit(30) //we can specify how many products we want to show on this page
//                        ->order(new Zend_Db_Expr('RAND()')) //in case we would like to sort products randomly
                   ;
 
Mage::getModel('review/review')->appendSummary($_productCollection);
 
$_helper = $this->helper('catalog/output');
?>
//
<?php if(!$_productCollection->count()): ?>
    <p class="note-msg"><?php echo $this->__('There are no products matching the selection.') ?></p>
<?php else: ?>
    <div class="category-products">
        <?php // List mode ?>
            <?php $_iterator = 0; ?>
            <ol class="products-list" id="products-list">
                <?php foreach ($_productCollection as $_product): ?>
                    <li class="item<?php if( ++$_iterator == sizeof($_productCollection) ): ?> last<?php endif; ?>">
                        <?php // Product Image ?>
                        <a href="<?php echo $_product->getProductUrl() ?>" title="<?php echo $this->stripTags($this->getImageLabel($_product, 'small_image'), null, true) ?>" class="product-image"><img src="<?php echo $_product->getImageUrl(); ?>" width="135" height="135" alt="<?php echo $this->stripTags($this->getImageLabel($_product, 'small_image'), null, true) ?>" /></a>
                        <?php // Product description ?>
                        <div class="product-shop">
                            <div class="f-fix">
                                <?php $_productNameStripped = $this->stripTags($_product->getName(), null, true); ?>
                                <h2 class="product-name"><a href="<?php echo $_product->getProductUrl() ?>" title="<?php echo $_productNameStripped; ?>"><?php echo $_helper->productAttribute($_product, $_product->getName() , 'name'); ?></a></h2>
                                <?php if($_product->getRatingSummary()): ?>
                                    <?php echo $this->getReviewsSummaryHtml($_product) ?>
                                <?php endif; ?>
                                <?php echo $this->getPriceHtml($_product, true) ?>
                                <?php if($_product->isSaleable()): ?>
                                    <p><button type="button" title="<?php echo $this->__('Add to Cart') ?>" class="button btn-cart" onclick="setLocation('<?php echo $this->getAddToCartUrl($_product) ?>')"><span><span><?php echo $this->__('Add to Cart') ?></span></span></button></p>
                                <?php else: ?>
                                    <p class="availability out-of-stock"><span><?php echo $this->__('Out of stock') ?></span></p>
                                <?php endif; ?>
                                <div class="desc std">
                                    <?php echo $_helper->productAttribute($_product, $_product->getShortDescription(), 'short_description') ?>
                                    <a href="<?php echo $_product->getProductUrl() ?>" title="<?php echo $_productNameStripped ?>" class="link-learn"><?php echo $this->__('Learn More') ?></a>
                                </div>
                                <ul class="add-to-links" style="margin:0; padding-left:0; list-style: none;">
                                    <?php if ($this->helper('wishlist')->isAllow()) : ?>
                                        <li><a href="<?php echo $this->helper('wishlist')->getAddUrl($_product) ?>" class="link-wishlist"><?php echo $this->__('Add to Wishlist') ?></a></li>
                                    <?php endif; ?>
                                    <?php if($_compareUrl=$this->getAddToCompareUrl($_product)): ?>
                                        <li><span class="separator">|</span> <a href="<?php echo $_compareUrl ?>" class="link-compare"><?php echo $this->__('Add to Compare') ?></a></li>
                                    <?php endif; ?>
                                </ul>
                            </div>
                        </div>
                    </li>
                <?php endforeach; ?>
            </ol>
            <script type="text/javascript">decorateList('products-list', 'none-recursive')</script>
    </div>
<?php endif; ?>

3-Create a Category(On Sale) and call the static block in the category. 
1- create category on sale.
2- inside category go to Display setting select display mode to static block only.
3-And select the on sale cms block you created.