The men who arrived on Tuesday night were not from the neighbourhood, local residents said, adding that the group wanted to completely demolish the school.
Local residents and ward authorities urged the men to be calm and return to their homes, but some members of the group refused to budge until police arrived at about 11pm. They ran away when they saw police approaching, vandalising stalls and knocking over trash bins as they fled, residents said.
The school in Manpyay ward (3) of Tharkayta township was partially dismantled on Sunday because builders had added a prayer hall and bathing basins despite only having a permit to repair the structure, officials said.
The authorities reached an agreement with the operators of the school the next day and marked the place as a restricted area.
The police are searching for the men who vandalised the neighbourhood on Tuesday night, they said.