The Beverly Hills Unified School District called the incident an "appalling misuse" of the technology and said students at Beverly Vista Middle School who engaged in the behavior may face expulsion among other consequences.
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Beverly Hills police are also involved in the investigation.
School officials say they learned last week of the images, in which faces of students at the school were superimposed on AI-generated nude bodies. They are still investigating to find out how many students were involved and how many may have been victimized.
The incident presents a reminder to parents about monitoring their children's behavior, said BHUSD Superintendent Michael Bregy. It also has become clear that legislation is not keeping up with the latest advances in technology, he said.
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"We really do ask that parents stay involved, look at phones and be really aware of what's happening," Bregy said. "It really comes down to knowing the difference between right and wrong."