Believing they had found something special at the local tip, the teenagers picked up the small bottles and later took the toxic find to class for show-and-tell.
"Normally, the mercury only rises here in summertime," Cunnamulla Hotel publican Doug Faircloth told AAP.
Mercury is a highly toxic heavy metal and exposure through skin contact, inhaling fumes or ingestion can cause damage to the brain, kidneys and nervous system.
Locals were more bemused than panicked, even as authorities moved to lock down parts of the town, Mr Faircloth said.
"Some kids found some mercury at the dump and then they were playing with it at school, and it's just gone a bit crazy," he said.
"Dunno how it happened, dunno how they found it and dunno how it got there.
"Honestly, Australia's turned into such a nanny state - I remember back in the old days when they had mercury in the thermometers, and they used to break them and play with it."
Paroo Shire Council Mayor Suzette Beresford believes the teenagers meant well when they brought the vials into town.
"Thinking they'd do show-and-tell with the mercury, I think," she said.
"They were high school kids who probably shouldn't have been at the dump rummaging."
Instead of an impromptu science display, the discovery led to Cunnamulla State School, a BP service station, the hospital waiting room, seven private homes, a council depot and the town's refuse tip being cordoned off while authorities race to contain any contamination.
Some families have been moved into an evacuation centre while emergency crews assess whether their homes are safe.
The scare has effectively frozen daily life in Cunnamulla, a town of about 1000 people, some eight hours' drive west of Brisbane.
The state school, which has about 130 students, has been shut since the incident on Monday and will remain closed on Thursday.
"The school and department will continue to follow advice from Queensland Health and the Queensland Fire Department regarding reopening of the school," a spokesman said on Wednesday.
"No further details can be provided due to student and staff privacy."
Teams of personnel had been deployed from Brisbane, including firefighters and specialist scientific crews trained to handle hazardous materials, a Queensland Fire and Emergency Services spokesperson said.
Firefighters have been conducting atmospheric testing around key sites, taking air readings to ensure mercury levels are not elevated and do not pose a risk to nearby people.
Once health checks and decontamination are complete, crews are expected to search the town tip for any remaining vials, a process that could take days.
Authorities believe the mercury may be linked to the illegal dumping of medical waste and will be investigated once the town has been declared safe.
"Whether the people knew there was mercury in whatever they dumped, that is something we really do not know much about at this stage," Ms Beresford said.
She said the children had been checked and cleared by health staff.
"We have now got the QFES people there, the specialist hazmat people, and they are going through remediating the sites until we get the all clear," the mayor added.
Queensland Fire and Emergency Services crews say decontamination could take days, with more locations possibly being added as the investigation continues.
