Three girls, two aged 14 and one 15, and two boys, 15 and 16, died in the single-vehicle crash on Tuesday night.
The Picton High School teens were crammed into a Nissan ute being driven by an 18-year-old man when it left the road and hit a tree near the Wollondilly Shire village of Buxton about 8pm.
The impact tore the ute apart and all five passengers died at the scene.
The P-plate driver survived, was arrested and taken to Liverpool Hospital with non-life threatening injuries to undergo mandatory blood and urine tests. He remains under observation.
Acting Inspector Jason Hogan Commander of the Metropolitan Crash Investigation Unit said the driver retuned a negative breath tested at the scene but was yet to be formally interviewed.
"Preliminary investigations would indicate that speed is a possible factor," he told reporters on Wednesday.
He described the scene as "extremely confronting" for the people who called triple zero, as well as first responders, some of whom lived in the community and knew the victims.
"It must be extremely traumatic for family, friends, first responders and the local community to have five young lives lost in such circumstances," he said.
Police family liaison officers were offering support to the devastated families and the Road Trauma Support Group would also provide counselling.
Police were investigating how six people came to be travelling in the ute, which was registered as a four seater.
"Obviously having six people in a four-seater vehicle is inherently dangerous," Mr Hogan said.
"That will be one of the lines of inquiry."
Education Department Deputy Secretary Murat Dizdar said the school community was "deeply impacted by this tragic news".
"It is an extremely distressing and disturbing day for the entire education family,' he said.
Two separate counselling teams were at Picton High, one dedicated to staff and another to supporting the 1100 students. The victims were from years 9 and 11.
"The department will provide that support for the school community for as long as it is needed," Mr Dizdar said.
Camden police chief Superintendent Paul Fuller, who has been in the force for 38 years, described the crash site as "one of the worst accident scenes I have ever come across".
Distraught teenagers wearing school uniforms laid flowers and cards on Wednesday at the site where their friends died.
Premier Dominic Perrottet also offered condolences, saying "Our hearts go out to them at this difficult time".
Supt Fuller said some of the victims' parents rushed to the scene shortly after the crash "who had found out through social media that their kids may have been involved".
A police family liaison officer worked with the families to identify the children.
Supt Fuller urged parents to know where their children were.
"Know who your kids are getting into a vehicle with, who that driver ... is and can they be trusted," he said.
Footage of the mangled wreck showed the ute shredded, with debris strewn for metres.
NSW Fire and Rescue Superintendent Adam Dewberry said some of the first responders at the scene were being counselled.
"Our firefighters live in the community they're responding to," he told ABC TV.
"We're conscious of that and we'll be providing all the support we can."
Wollondilly Shire Mayor Matt Gould said the Buxton community was waking up in shock and mourning.
"The loss of so many young lives is just devastating and you can't put into words the overwhelming loss many in our community are feeling," he posted on Facebook.
"Our thoughts are with the Picton High and Buxton communities and particularly with the family and friends of those involved, as well as the emergency responders who had to deal with such a heartbreaking scene.
"There's an awful lot of people in the shire that are hurting today, so we need to be there to support and look out for each other."
Investigators are appealing for anyone with dashcam footage or information to contact them.
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