Alyssa Shepard is in police custody after causing the fatal crash in Rochester.
Police said the children were two twin boys and their sister. They have been identified as 6-year-old Xzavier and Mason Ingle and 9-year-old Alivia Stahl. All three were students at Mentone Elementary School.
Alivia reportedly shielded her twin brothers before they were fatally struck by the driver.
An 11-year-old boy who suffered several broken bones was airlifted to a hospital in Fort Wayne.
Investigators said Shepard is cooperating with their investigation.
Later Tuesday, Shepard was charged with three counts of reckless homicide, one misdemeanor count of disregarding a stop sign and causing injury.
The school corporation said in a statement, "Our school corporation has suffered a tragedy this morning. We have learned of three student fatalities and one student seriously injured and airlifted to a Fort Wayne hospital as they were hit by a vehicle while boarding their bus.
We have deployed all school counselors to meet the emotional needs of our staff, students and parents.
We are awaiting to learn more confirmed details but wish to ask the community to come together to pray for the families, our students and our staff."
"I haven't seen first responders and troopers cry in a long time," Indiana State Police Sergeant Tony Slocum said. "When the children's father had to make identification of his children, that was just gut-wrenching. We saw tears today and our hearts just go out to them because most of us have children and we can't imagine the pain that he felt today. It was heartbreaking It's still heartbreaking."
Shepherd is charged with three counts of reckless homicide and one misdemeanor count of passing a school bus when arm signal device is extended, causing bodily injury. Shepherd was being held at the Fulton County Jail on a $15,000 surety bond.