The officers were at the Friedrich-List Economics School Tuesday talking to the group of 13 and 14 year olds about moral courage when a girl reported that about $6.52 was missing from her pocket, The Local.de reported Monday.
The officers split the teens up by gender into separate classrooms and searched them for the money.
"Some of the schoolgirls had to briefly open their bras while some schoolboys had their underpants searched," police spokesman Wolfgang Wenger told the German newspaper Süddeutsche Zeitung.
Police said none of the teens had to remove all of their clothes but some of them told the newspaper they had to take off their T-shirts and pants, and in some cases their genitals had been checked.
"By the end, all the girls were crying and one of the boys had burst into tears too," one witness said.
A relative of one student complained to police about the incident.
"Our internal investigations section took on the case immediately and went to the school that day to clear up the matter," Wenger said.
"One can search bags and get people to take off their coats on suspicion of theft, even when it's only [$6.52]. But obviously it was way over the top to search the students in such an intimate fashion."