The incident took place at the Papdale Halls of Residence in Kirkwall on Wednesday.
Two young people remain in hospital, however, medical staff have said their conditions are not causing concern.
It is understood that the incident involved an ‘unknown substance’ and Police are liaising with other bodies as part of their efforts in establishing the full circumstances of the incident and if there is further danger to the community.
A Police Scotland spokesperson said: “Police Scotland officers are liaising with NHS Orkney and Orkney Islands Council after five pupils took unwell at the Papdale Halls of Residence in Kirkwall yesterday, Wednesday, 26 January 2022.
“Two young people remain in hospital however medical staff have said their conditions are not causing concern at this time.
“A joint investigation is ongoing to establish the circumstances surrounding the incident and enquiries are ongoing.”
Orkney Island Council has asked parents and carers to ask their children if they have in their possession an unknown substance after what they describe as a ‘concerning incident’.
In particular, they are looking for a clear capsule that may contain a brown or other coloured liquid.
The council in Orkney commented that ‘this is not about punishment’ but about ‘health and well-being of our young people’.
An Orkney Island Council spokesperson said: “It is important that anyone with such a capsule, hands it over to their parents, the school, an appropriate adult or the police and not to ingest it.
"It’s vital that we all work together to ensure our young people are made aware of the potential dangers of taking substances that they are not familiar with.
"We will be working with the Police, NHS Orkney and the Orkney Drugs Dog charity to further educate and engage with students throughout Orkney schools about the dangers of substance misuse.
"We would really appreciate any assistance parents and carers can provide.
"Our grateful thanks are extended to the staff at the Papdale Halls of Residence who dealt with the incident swiftly and professionally ensuring the young people concerned received the medical attention and support required.”