As the bus was heading to Srirangapatna, the driver noticed smoke from the engine soon after which he stopped the vehicle and asked the children to deboard before it caught fire, police said.
The flames engulfed the bus and burnt it, badly damaging the vehicle before the fire brigade came, police said.
The mishap caused disruption of traffic on Bengaluru-Mysuru highway.
According to a teacher, some 300 students from a school in Bengaluru had proceeded to Srirangapatna in six buses.