Capuchino High School in San Bruno had already handed out more than 100 yearbooks when the discovery was made on Wednesday.
It is now asking those students to return them.
ABC7 News was at the school Thursday night where there was a softball game, and found some people were clearly angered by what happened.
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"It is upsetting and it happens all the time. Seventy-two years old and still happening and so it's not better, it's still happening," said Doris Rose, San Bruno resident.
The school is now in the process of covering up the offensive language in the remaining yearbooks with tape.
It says if students try to remove it, the page will tear.
In a letter, the principal says in part:
"I interviewed the student, and they admitted that this was their intention. Using hate speech has serious consequences which may include suspension, exclusion from year end school activities and the graduation ceremony."