A teacher has been fined $300 for showing her secondary school pupils a beheading video made by Isis.

Alexiss Nazario showed the video to the 13 and 14-year-old pupils at the South Bronx Academy for Applied Media in class last year.

The clip showed a masked man holding a knife to the neck of a victim dressed in an orange jumpsuit.

The New York Post reported pupils told the inspectors the video blacked out the actual beheading but showed the victim's severed head.

One girl told a member of staff that she was "scared" by what she had seen, while another pupil described the video as "gross", saying it had made him "uncomfortable" and he had been unable to sleep since, according to the Office of the Special Commissioner.

"This is what's going on in the real world," Ms Nazario is reported to have told one student.

A teacher of 26 years experience, earning $105,000 a year, Ms Nazario told the New York Post she accidentally played the video.

"I was scrolling looking for a specific video. I clicked on the wrong thing. It was a mistake. It was an error," Ms Nazario said. "I freaked out. I had no idea that was playing."

City Department of Education officials tried to suspend Ms Nazario, but the case was ruled in favour of the lighter penalty of a $300 fine.

"This teacher demonstrated a complete lack of judgment, and this incident betrayed our schools' promise to provide a safe and supportive environment," department spokeswoman Devora Kaye said.