Witnesses said gunmen shot civilians and police in Damboa, about 85km from the state capital, Maiduguri.
The latest killing comes almost one week after suspected insurgents killed 44 people in a mosque in the nearby town of Konduga.
Local official Ayamu Lawan Gwasha said security forces repelled gunmen who attacked the police station and a military post in Damboa. Farmer Mustapha Aji said other militants gunned down civilians and firebombed about 20 homes.
He told the Associated Press that residents had the premonition of an impending attack following the deaths in Konduga and had asked for more security; which was yet to arrive.
Details of the attack are sketchy as there is no telecommunications network in Borno State since the declaration of emergency rule by President Goodluck Jonathan in May in Adamawa, Borno and Yobe states in order to battle the militants.