Education Secretary Angela Constance issued the warning as she launched the first television campaign in the UK aimed at tackling the problem.
Child sexual exploitation occurs when a young person under the age of 18 is manipulated, forced, pressurised or coerced into taking part in a sexual act in exchange for something.
Ms Constance warned any child could be at risk.
She said: “Child sexual exploitation is happening to boys and girls in Scotland. By its very nature this form of child abuse is often hidden and many young people who are affected don’t realise they are a victim and will not ask for help.
“The first step in tackling this abhorrent crime is understanding it can happen to anyone. It can take many forms - online, through social media or on phones, as well as in person on a one-to-one or group basis.
“Barnardo’s Scotland directly supported 266 young people who have been victims or were at risk last year, but these figures may be the tip of the iceberg.
“New research shows that most parents don’t know a lot about it and don’t believe that their family is at risk. This campaign aims to change that and help parents and young people understand the warning signs and prevent the abuse before it takes place.”
While 93 per cent of parents have heard of child sexual exploitation, almost a third (29 per cent) admit knowing little about it. The YouGov research also shows 36 per cent believe it will not affect their family.
The new TV advert and website - www.csethesigns.scot - aim to raise awareness by showing how conversations online can potentially put youngsters in danger and highlight warning signs.
The campaign is aimed at both parents and young people aged between 11 and 17, with the message that child sexual exploitation can happen to any young person, regardless of their gender or background.
It is being backed by Police Scotland, ChildLine and various other children’s charities, including Barnardo’s Scotland, NSPCC Scotland and Children 1st.
Police Scotland Assistant Chief Constable Malcolm Graham said: “Child sexual exploitation (CSE) is an evolving issue, as is our understanding of it and how it can affect young people.
“CSE takes place across all communities and it affects girls and boys. Young people are exposed to exploitation in a myriad of ways from online grooming to contact offending. They may not recognise or understand what’s happening until it’s too late.
“Raising public awareness and particularly parental awareness of what to look for if their child is being exploited is an important part of tackling this crime.
“If anyone suspects a child may be a victim of any form child abuse including sexual exploitation then contact the police or one of our partner agencies. In the same vein I would like to emphasise that if anyone suspects individuals of committing acts of child abuse then contact us and we will investigate thoroughly and robustly in order to keep children safe.”