Armed men kidnapped 78 students from a Presbyterian school in the Nkwen village, Northwest Region Governor Deben Tchoffo said.
The separatists, who are protesting against President Paul Biya's French-speaking government, have imposed strict curfews, shuttered schools, and killed government soldiers and policemen in guerilla raids. The children, their principal and a driver were taken into the bush outside town, military and government sources said, and the army had started searching the area.
Communication Minister Issa Bakary Tchiroma told AFP news agency that "all 79 students have been released", but did not give any further details.
Meanwhile government has accused separatists who are now fighting an armed campaign for independence in the English speaking side of the country where the kidnappings occurred.
The US State Department condemned the kidnappings and called for the immediate safe return of students and staff.
No one has yet claimed responsibility for Monday's mass kidnapping.More news: Three Red Sox players earn Gold Gloves
Seventy-nine school pupils were abducted by gunmen earlier this week in a troubled region of Cameroon.
"The search for the hostages has been launched - every man has been called in", the government source said, speaking after a crisis meeting. President Paul Biya has been in power since 1982.
The 85-year-old was credited with 71.3% of the vote, although the ballot was marred by allegations of widespread fraud, low voter turnout and violence.
The government was accused of relying heavily on people trained in the French legal and educational tradition to work in key posts and generally marginalising Cameroon's English-speaking minority, who make up about 20% of the population.
But Biya refused any concessions and a year later, radicals declared an independent state - the "Republic of Ambazonia" - taking up arms soon after.
The separatists have gunned down troops and police, boycotted and torched schools and attacked other perceived symbols of the Cameroonian state.More news: This Is Parineeti Chopra’s Hefty Demand From Nick Jonas For ‘Joota Chupai’
The Anglophone separatists maintain they are being marginalised and dominated by the Francophone majority.
He said that it was most likely to have been carried out by separatists.
The conflict has seen a resurgence in the Northwest region after several months of calm while fighting was worse in the Southwest region.
More than 300,000 people have fled the violence, many of them now living from hand-to-mouth and exposed to varied dangers in the forests, and some across the border into Nigeria.More news: Samsung to reveal some features of foldable phone this week