In what is believed to be the first case of its kind in Scotland, Deborah Scott (22) said teachers at the Royal High School in Edinburgh failed to protect her from pupils who taunted and assaulted her.
Scott told the Court of Session in Edinburgh that the bullying had caused her so much distress she took an overdose.
Council representatives said the school had operated an anti-bullying policy and some of the incidents complained of were never reported to staff.
Lothian's insurer, Zurich Municipal, is handling the case for the council's successors.
Lord Macfadyen allowed the case to go to a hearing.