Explosions and gunfire shook Potiskum city and sparked panic and chaos from late Thursday, while residents reported several dead, and schools and a government building burnt.
Police said they were seeking to restore calm and clear unexploded bombs on Friday morning, while some of the ordnance was still detonating.
“There are so many bombs here and there, and I can’t give you the casualty figure now, because our men are still in the field to restore calm,” said state police commissioner Patrick Egbuniwe.
A military source said some houses had been destroyed with home-made bombs and a security checkpoint was attacked, but he also could not give a death toll yet.
He said Islamist extremist group Boko Haram was suspected to be behind the violence.
“I cannot ascertain as of now how many people were killed, apart from the one (suspect) that I know who was shot at the checkpoint,” the military source told AFP.
Residents of the city, which has been repeatedly hit by Boko Haram, described heavy explosions and gunfire, with the city under military lockdown on Friday morning as security forces sought to track down the attackers.
Two residents spoke of seeing a number of bodies, while one said several schools were burnt, including an Islamic seminary.
“From where I stand, I can see the local government secretariat completely burned and several shops around it smouldering from last night’s attack,” one resident said.
Another said that “at least five primary schools, including an Islamic seminary, have been burnt in the attacks.”
Violence linked to Boko Haram’s insurgency in northern and central Nigeria, including killings by security forces, is believed to have left more than 2,800 people dead since 2009.
Thursday’s violence seemed to have begun with an attack on a security checkpoint, which led to gun battles with the assailants.
Residents said chaos then spread to other parts of the city, with bombs exploding and gunfire echoing through neighbourhoods.
Blasts and gunfire also rocked the city on Wednesday.
Authorities said then that home-made bombs were thrown at security forces during a search of a suspected Boko Haram hideout, resulting in a gun battle, but gave no indication of casualties.
Northeast Nigeria has been the home base of Boko Haram, though its attacks have also spread to other areas of the north and centre.
The group has claimed to be seeking an Islamic state in Nigeria, though its demands have repeatedly shifted. Boko Haram is believed to include a number of factions in addition to imitators and criminal groups who carry out violence under the guise of the group.
Nigeria, Africa’s most populous nation and largest oil producer, is divided between a mainly Muslim north and predominately Christian south.