Local residents told the BBC those killed were from the Igbo community from the south of the country.
They had been meeting to organise how to transport the body of an Igbo man shot dead by gunmen on motorbikes on Thursday evening.
According to Zubairu Abdulaziz, one of the residents in the town of Mubi, “There was an attack last night at Good Will Hotel in which five people were killed, all of them Igbos, and today, some friends and relations of one of those killed in the attack gathered in his house to mourn his death.”
The local police chief said he believed Islamist group Boko Haram was behind the attack.
The militant group has staged numerous attacks in northern and central areas in recent months – on Christmas Day it attacked a church near the capital, Abuja, killing dozens of people.
There have been unconfirmed reports that Boko Haram has warned all southerners – who are mostly Christian and animist – to leave the mainly Muslim north of Nigeria.
On Thursday, at least six people were reportedly shot dead at a church in Gombe, also in north-eastern Nigeria.
Mubi is in Adamawa state which borders Borno state, where the radical Islamist militants emerged.
Last month, the president declared a state of emergency in Yobe and Borno states in the north-east, Plateau state in central Nigeria and Niger state in the west following a surge in ethnic and sectarian violence.
‘Planning to flee’
Adamawa state police commissioner Ade Shinaba told the AP news agency that he believed Boko Haram was behind the Mubi attack.
His spokesperson Atine Daniel told the BBC officers were heading to the town to investigate the shooting.
She said at least 10 people had been killed in the shooting on Friday morning.
Members of the Igbo community in northern Nigeria often own shops and businesses.
The BBC’s Abdullahi Tasiu in Yola, the capital of Adamawa state, said many Igbo traders in Mubi town are reported to have closed their shops today and are planning to flee the area.
The trouble began on Thursday night when two people were shot in a drive-by shooting.
Sources said relatives and friends of one of the victims organised a meeting to discuss how to raise money for the transportation of the dead body and funeral.
“It was while they were holding the meeting that gunmen came and opened fire on them,” a resident told our reporter by phone, adding he believed “a dozen” people had been killed.
Most people in the area, both native residents and those from other states, were now living in total panic, our reporter says.
Another resident told our reporter that the number of killings by motorcycle-riding gunmen is increasing in the area.
The BBC Hausa Service said it had a report last week that an armed gang on motorcycles twice targeted a market in Mubi, shooting several people and stealing money.