It was not yet possible to give a death toll, the senior officer with direct knowledge of the raid told AFP. The shooting began at about 11:00 am.
“The terrorists disguised as traders and opened fire on unsuspecting traders at a market in Damasak” in Borno state near the border with Niger, the officer said.
Mohammed Damasak, who works with the local government, said the weapons were concealed in containers the gunmen brought to the market.
“They pretended to be traders but sadly inflicted horror. Many traders escaped with bullet wounds while many are lying dead at the market,” he added.
Boko Haram, which wants to carve out a strict Islamic state in northern Nigeria, was blamed for a similar raid at the weekend that left 48 fish sellers dead in the nearby town of Doron Baga.
Relentless violence which has plagued the region for years had eased slightly as Boko Haram apparently pursued a campaign to establish itself as a rebel government in captured towns, trying to assure locals that they could live under Islamist rule.
But many experts argued that the militants would ultimately resume killing, especially if confronted with military pressure.
The Boko Haram insurgency is estimated to have cost more than 13,000 lives since 2009.