Covina Police Lt. David Miles said the two students, both girls, were found about midnight after the Los Angeles Police Department received a tip.
Now police believe the rest of the group of 32 missing Chinese exchange students might be in Covina or in homes in the San Gabriel Valley.
It's an international mystery that had confounded police who searched for clues around the Los Angeles airport Monday, reports CBS News Correspondent Sandra Hughes.
Police searched for any information about 32 Chinese teen-agers who were supposed to fly home to Shanghai Monday but never boarded their flight.
"As they were entering the terminal, the children were approached by a group of male Asians who assisted them leaving the area. They left with their baggage and with their passports," said Commander Dave Kalish of the Los Angeles Police Department.
The students, who arrived on a chartered bus, studied English for a month at the University of Redlands while staying in homes with host families.
They are boys and girls aged 14 to 17 years old.
"They were very studious, extremely studious," recalled host mother Alicia Suchoparech. "Of all my students, they really applied themselves well to the program and succeeded."
"It appears that this was a very well-orchestrated effort to remain here in the United States," said Lt. Anthony Alba.
But if they were hatching a plan to defect, no one suspected.
"She talked about China and the things she liked and loved. I didn't have an opinion she was trying to get away from that," said host mother Susan Bailey.
The police took 32 missing persons reports and notified the State Department, which did not comment about the situation.
The Chinese consul of Los Angeles, Zhengquan Liang, said he knew nothing about the teens' disappearance and was unsure what action his government might take in response.
"It's very unusual," Liang said.
The L.A.P.D. says the students apparently defected, but that so far none has applied for asylum.