Horrified staff at Partington Church of England Primary School, overheard the pupil boasting to friends about the weapon he had in his school bag.
It was then confiscated and the youngster was excluded from the school in Hull, East Yorks, for a week.
Parents were outraged after the school hushed up the incident, claiming the incident has left their children terrified that they might be attacked.
"If there is an incident involving a knife at my child's school, I want to be told about it by the head teacher," the parent said.
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Before staff managed to confiscate the knife, the boy is believed to have taken it from his bag and shown it to two classmates.
Although no direct threat was made to staff or other pupils and no one was injured, parents say they only learned about it after talking to one another at the school gates.
"He showed the knife to two other small children. He was not jabbing it or anything like that, but he apparently told two other children that it was to stab the bad teachers with," the parent said.