The fight between "Leb" and "Aussie" students had been simmering for months, but education officials denied there was any ongoing violence at Hoxton Park High School in Hinchinbrook, south west Sydney.
However, parents and students said tensions between students had escalated in the past few years.
A 14-year-old student said that she was "jumped" on by "10 Australian girls" who punched, kicked, scratched and spat at her.
"They were saying, 'f ... Arabs', 'you bitch', 'you slut' - everything. They said all Muslim mums with scarves can hang themselves with it," News.com.au quoted the student as saying.
"I was very upset and very angry. Other Muslim children at school were very angry, too," she said.
Posts on social networking site Facebook claimed the attack on this girl was in response to a fight between her friends and the group who "jumped" her two weeks ago.
The girl said she called her relatives for help and a large crowd of her family and friends gathered at the front of the school.
They allegedly clashed with police who used capsicum spray to subdue the crowd and arrested six men and women, aged between 26 and 50, who were later charged with offences including affray, intimidation, assaulting police, resisting arrest and offensive language.
Witness Zahra Elasmar, whose two children attend the school, said the fight was a spill over from the racist slurs made on students' Facebook pages.
Elasmar said she wrote to the Department of Education and Training about racism at the school and, with other parents, met with DET representatives, school staff and police liaison last month.
She said she collected 50 signatures on a petition sent to officials, but that it had fallen on deaf ears.
"The principal doesn't know how to deal with this," she said.
"What we witnessed today is not right in a multicultural country. We don't want another Cronulla riot at Hoxton Park," she stated.
A Department of Education and Training spokesman said the School Education Director will meet with Elasmar "soon" and that students who engage in racist or other anti-social behaviour are "disciplined".