In some schools less than 10 percent of students showed up, Israeli media reported.
Some students preferred to stay away from the city and take advantage of government and charity programmes offering residents of Sderot the chance to spend time in hotels in other parts of the country, beyond the rockets' range.
As matriculation examinations are set to begin soon, other students are attending marathon sessions in nearby schools, hoping to be able to finish the school year.
Some teenagers, however, have given up.
"I can't concentrate"
"We didn't study for exams at all," says Sali, a 17-year-old from Sderot who is currently living with his school friends in a Jerusalem hotel, under a government programme. "I can't concentrate, the rockets are very distracting."
"A rocket fell in our school, one year ago. It was very frightening," Sali adds.
His friend, Yossi, said that since the latest increase in rocket fire, he had spent his time away from Sderot, but was growing restless.
"We don't go to school. We just sit here and play cards and smoke cigarettes," he says.
"I will go take the exam in maths, but I've hardly studied. I will give it a shot," says Yossi, without much enthusiasm.
"It's always hardest for the kids. This is a hard age anyway, to be a teenager," says Simi, an elderly woman who decided to leave Sderot only on Monday, about 10 days after the escalation began.
"We are the founders of Sderot. We came here in 1955. But enough. We needed to get away, breathe a little," she says as she sits with three friends, all born in Morocco, and all "village elders" of the border town, as one man calls them.
"This morning was the funeral," she adds, referring to a man killed on Sunday by rocket fire, the second death in a week. "We cried the whole day. It was hard."
"But we will go back," she says. "No matter what, we will go back to Sderot."
Meanwhile, Israel continued with military action against rocket launchers and what it says are Hamas activists in the Gaza Strip. Over the weekend, seven Palestinians were killed.
On Sunday, Prime Minister Ehud Olmert said in a cabinet meeting that the country's air force would step-up attacks against militant targets in the Gaza Strip. Several attacks on Hamas bases followed.
Since the start of the Israeli military campaign less than two weeks ago, some 48 Palestinians, mostly said by Israel to be militants, have been killed.
Over 200 rockets have been fired at southern Israel in this time, the Israeli military said.
Also on Monday there were signs that an internal Palestinian ceasefire, reached over a week ago between the rival Hamas and Fatah factions, might be falling apart. Armed gunmen from the two movements fought each other in a central section of Gaza City, but the incident was quickly broken up.
In the last wave of infighting, some 55 Palestinians were killed, and normal life in the main conflict zones came to a standstill for several days.
Palestinians are now hoping a ceasefire deal will be reached with Israel and that the internal truce will hold.