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Police were called into the school in Co Down after a member of staff became aware of claims that explicit video clips featuring teenage pupils were being circulated.
They are now examining the claims to discover if a criminal offence has been committed.
And as the police probe continues, staff have slapped a ban on pupils in the school using mobile telephones.
According to sources, the clips were "spreading like wildfire" amongst pupils via mobile phones.
It's believed the clips had also temporarily been posted on the Bebo website, but were quickly removed.
It's understood the clips - filmed on a mobile phone, and seemingly with the knowledge of those involved - include footage of a teenage girl engaging in a number of sex acts with a number of males.
A police spokesman last night said: "Police in Banbridge are aware of allegations of sexual misconduct at a school in the Banbridge area.
"Police are working with the school to establish if a crime has been committed."
Said one source: "These videos have been spread right through not just that school but other schools as well, and further afield.
"The girl involved didn't expect this to happen, but is now powerless to stop the clips being spread about.
"Her parents have also been made aware of what is happening and are absolutely mortified by it."
A spokesman for the school told Sunday Life: "There are child protection issues involved in this, so I really can't comment. The Board of Governors have it on the agenda for (their next meeting)."
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