A security video from Aug. 25 caught the two boys pulling their pants down and forcing the younger boy to perform sex acts on them, police told the Houston Chronicle.
All three boys are special needs children in the Houston Independent School District. Their names were not released because they are minors, police said.
The two suspects were arrested last week.
The victim's mother told the Chronicle that she remembers her son coming home from Thompson Elementary School without his belt on or with his pants unbuttoned.
But she didn't think twice about it until cops called her in late August and said the boy had been molested.
"He has a hard time sleeping," the mother, who was not identified, told the newspaper. "He's just been having a hard time. He cries a lot."
The mother said she has pulled the boy from school.
Juvenile defense attorney Bill Hawkins told the Chronicle that the charges against children so young were "exceedingly unusual."
If convicted of aggravated sexual assault of a minor, the boys could face up to 40 years in prison. However, a court could also decide on a lesser punishment for the boys, including no jail time.
Authorities discovered the shocking incident after an unidentified parent, who is not related to the assault case, asked district officials to review conditions on the bus on Aug. 30.
School district officials said they spotted the sex acts while reviewing security footage and called Child Protective services.
Houston police spokesman Kese Smith said the investigation took several months because juveniles were involved.
One of the accused boy's mothers, also not identified, said she didn't believe her son was involved because he knows the difference between right and wrong.
"I don't know what went on on that bus, but I don't believe that went on," she told the Chronicle.