The image, published in the Lehigh Valley Times, shows members of the Phillipsburg high school wrestling team.
One student is saluting. Two others are wearing pointed hoods.
And a dummy wearing a Paulsboro High School wrestling t-shirt is shown hanging by a noose.
The Paulsboro schools superintendent told WFMZ-TV that there are a number of African-American students on its wrestling team.
"It's in inappropriate. It's insensitive. It's just wrong on so many levels, a foolish act by a group of young men," said Superintendent Walt Quint. "My guess is they aren't even aware of the history and how insensitive and wrong this is."
The state athletic association has asked Phillipsburg officials to file a report on the matter.
The association has also reported the incident to the state attorney general's office and the division of civil rights.