The monster my players were fighting acted first in the intitative order. It dove into the lake and out of sight. They all readied actions to attack when it revealed itself. On its next turn it attacked, triggering all of their readied actions, so it got off its attack, but then they all attacked him. We all got really confused as to whose turn it now was, the monster again or my players. I ruled that it was the monster but now that seems wrong. Did I rule this correctly? How should I be handling this?
It was the players' turn next
The rules say:
First, you decide what perceivable circumstance will trigger your reaction. Then, you choose the action you will take in response to that trigger, or you choose to move up to your speed in response to it. Examples include "If the cultist steps on the trapdoor, I'll pull the lever that opens it," and "If the goblin steps next to me, I move away."
When the trigger occurs, you can either take your reaction right after the trigger finishes or ignore the trigger. Remember that you can take only one reaction per round.
The player attacks happen as reactions sometime during the monster turn. The exact timing depends on the triggers the characters choose for their readied actions. It's likely that the player character attacks happen before the monster attacks, if they choose a trigger such as "I attack as soon as the monster is within range".
Then the monster turn ends and the player turns begin.
(Note that this answer depends on what edition of D&D you're using. D&D 3.5e had very different rules for this!)
In a circumstance like this, the monster might choose to use remaining movement to dive back into the lake. Note that this won't provoke attacks of opportunity because the players have already used their reactions.