The three male juniors are accused of repeatedly breaking into classrooms at night and hacking into teachers' computers and changing their grades online.
Palos Verdes Estates police say they also stole hard copies of tests from teachers' desks, figured out the answers, and then sold them along with the actual exams to classmates before the tests were given.
"I think it's a little ridiculous, like I would never do something like that. I know that everyone in my grade, we were completely shocked," said student Tierney Wixted.
School principal Nick Stephany says up to 12 students might be involved in grade-tampering or receiving stolen tests. Two have been recommended for expulsion and others were suspended for receiving stolen tests and information.
The three students directly involved are facing charges of burglary and conspiracy to commit burglary.
The elaborate cheating scheme reportedly began months ago after the students picked the lock to a janitor's office, stole a master key and used it to gain access to classrooms.
Police say the students used devices known as "keyloggers," which they attached to the computers' USB ports. These devices tracked teachers' keystrokes as they typed in usernames, passwords and other confidential information.
Officials say the students then remotely accessed the computers from home to change their grades.
"It shouldn't reflect as a student body. It's just the few kids that had the, I don't know, the need to have higher grades," Danika Bark.
The students allegedly broke into classrooms as many as 20 times.
"By the looks of it, these people were extremely smart and could have gotton into great schools and been really successful, but they completely just messed up their future and have this on their record now," said Wixted.
Stephany said school locks will be changed and security will be tightened on district computer networks.
Students admit that there is pressure to do well at Palos Verdes High School.
"I think that here, a lot of people are super competitive especially, but I don't know. I don't think that's an excuse to do what they did," said student Michaela Badagliacca.
Police say the cheating has been going on for at least six months and was finally noticed by teachers who kept hardcopy records of grades.