A photo circulating on social media shows two teens who attend Palos Verdes High School standing together and laughing while holding the sign.
The N-word appears to be highlighted in bold letters on the sign, which reads: "BiaNca You are racIst but I would Give anything for you to Go with mE to PRom."
Eyewitness News blurred the students' faces because they are minors.
A woman who tweeted that her daughter is a student at Palos Verdes asked people to call the school and "condemn this horrific sensibility #racism #ignorance."
One student said racism isn't exclusive to the school situated in the affluent Palos Verdes community.
"I think there's racism everywhere, you can't just isolate it to Palos Verdes High School," student Ryan Pascal said. "It's horrible that it's coming to light in such an offensive way, but these are conversations that need to be had."
Principal Dr. Allan Tyner released a statement following the backlash:
"At this time, I am asking all teachers and parents in our school community to join me in reminding our students that we live in a society that must respect diversity and tolerance."
Eyewitness News has learned that the sign was made by another student, and the school has taken disciplinary action against all students involved.
Students told Eyewitness News that although the students involved have apologized, saying they didn't know the sign would be hurtful, other students said they knew exactly what they were doing.
"I don't know what they thought was funny about making a racial comment, but I think now they've gotta be regretting it," parent Robert Price said. "Hopefully, it won't follow them to college, it won't follow them to whatever jobs they're gonna apply to, and they'll take their lumps and move on.
In a statement on the school's website, Tyner said he was meeting with all students, class by class, on Wednesday to "review appropriate behavior and how the use of hurtful racial slurs like the one used on this recent picture posted on social media is unacceptable."
"I know that this one unfortunate event does not represent us as a school community. Racist words and racist acts have no place in our school community. We will rise above this, learn from this, and be a better school community because of it," Tyner said in the statement.
One teacher said she would also address the issues surrounding the controversial photo with her students.
"This day, I have ninth- and tenth-graders so they will be writing a prompt about the damage that this can cause. Not only to a school, but to other students that are seeing this negativity," teacher Rebecca Jessop said.
The school's prom is scheduled for Saturday.
Palos Verdes police said there would be an "increased presence" at the school Wednesday due to the photo.
@PVEPD will have an increased presence at the schools today due to recent social media postings. @pvpschools @PVPCouncilPTA @PVHS_Seakings @PVIS_Seakings @LbPrincipal @pastellj @PVHSTyner @pvschools @PVPHS_Panthers @PVPHS_PTSA @MontemalagaPTA @ptsa_pvhs— Palos Verdes PD (@PVEPD) May 15, 2019