The police ombudsman confirmed that the spray was used during the parade on the Ormeau Road on Tuesday evening.
The PSNI said two officers received minor injuries during a "minor disturbance". A 26-year-old man has been charged with assault.
The parade's organiser said children suffered swollen eyes and lips.
Noel Liggett told Good Morning Ulster said the CS spray was "indiscriminately" used after police confronted the parade.
He said police believed cars were being damaged as the parade made its way up the road, an allegation he described as "completely false".
"Around 20 children were on parade with us yesterday, the average age would be six, seven, eight and nine. Around that age group," he said.
"I was quite shocked to see many young children in a state of shock.
"Five of them had suffered the effect of CS gas and a number of young children in the band had also suffered the effects of the gas."
Mr Liggett said a "very frank meeting where both sides put their case" was held with police after the parade and that he would "question the common sense" of police.
"The police knew this was a parade for juniors, there was a lot of young children in the area," he said.
Writing on Twitter, Mrs Foster said she would be meeting senior police over the incident.
Police said a PSNI motorcycle had also been damaged in the incident.
A man will appear at Belfast Magistrates Court on Tuesday, 26 April charged with disorderly behaviour and two counts of assault on police.
First Minister Arlene Foster has said she has spoken to the chief constable after police used CS spray during a junior Orange Order parade in Belfast.