Captains Flat Community Preschool has been closed for deep cleaning after elevated levels of lead were found in parts of the playground.
It was discovered during NSW government testing for heavy metals around the nearby former Lake George Mine.
In a statement, the preschool announced it would be closed until the school underwent a heavy metal deep clean.
The preschool said it would implement a "no shoes inside" policy when students returned to decrease risk.
The statement said the playground would be capped with topsoil and turf.
"We are exploring available options including providing an indoor-only preschool program," the statement said.
"We know you will support us as we work together to get our preschool back to being the wonderful early childhood service that it is."
