Boko Haram gunmen surrounded the village of Izge, near the border with Cameroon, spraying it with bullets and burning down dozens of houses.
Local resident Abubakar Usman stated: “As I am talking to you now, all the dead bodies of the victims are still lying in the streets. We fled without burying them, fearing the terrorists were still lurking in the bushes.”
Borno state Police Commissioner Lawal Tanko has confirmed the attack but said there are no details of casualties yet.
Another eyewitness, Lawan Madu, said hundreds of residents had fled the village.
President Goodluck Jonathan sent extra troops to northeast Nigeria in May in a bid to crush the insurgents, who seek to create a breakaway Islamic state in largely Muslim northern Nigeria.
Islamists have retreated into the remote Gwoza area bordering Cameroon and continue to mount deadly attacks that increasingly target civilians.
President Jonathan faces an election next year and the persistence attacks from Boko Haram’s 4-1/2-year-old insurgency remains a major headache.
Boko Haram fighters in trucks painted in military colours killed 51 people in an attack on the Konduga local government area last week.