A fifteen-year-old youth was also apprehended in connection with the case.
The incident had taken place on February 16 at Achampet in Mahabubnagar district, police said.
Deputy Superintendent of Police T Govardhan said that Yadagiri, who claimed to practise black magic, told Venkatesh and Babu that he had dreamt about a hidden treasure but they needed to sacrifice a boy to find it.
Venkatesh and Babu kidnapped the boy from a government school in Achampet.
Yadagiri, Venkatesh, Babu, a woman called Achamma and the minor took the victim to an abandoned mill, said Circle Inspector Venkateshwarlu.
The victim's parents lodged a complaint with police when he did not return from school. His body was found next day.
The accused were today produced before a court which remanded them to judicial custody. The minor was produced before a juvenile justice court which sent him to an observation home, the DSP said.