The motives behind the incident, which took place early Thursday in the Mediterranean city of Beziers, were not immediately clear.
The teacher, whose name has not been released, was flown via helicopter to nearby Montpellier and hospitalized with serious burns.
"I saw a person who was running and on fire. it was a human torch," said Dolores Roques, a fellow teacher at the school, on France-Info radio. "I didn't believe my eyes. It seemed unreal. The students were screaming everywhere."
Education Minister Luc Chatel visited the hospital, and said a psychological support unit would be set up in the school.
Chatel said her health "is extremely worrying." Speaking on RTL radio, he described her as a "teacher who is in a situation of great fragility" who has been undergoing medical and professional help and that an investigation would help determine the reasons for her "desperate act."