A car bomb explosion in the Post Office area of Maiduguri, Borno State, has killed at least 17 people, police sources have told AFP.
Blood-spattered people were seen fleeing and vehicles crashed into each other, while soldiers fired automatic weapons.
A suicide bomber is suspected of being behind the blast near a market.
The attack is the deadliest bomb attack within the city in several months.
Residents of the area said security agencies have since cordoned off the vicinity while the dead and injured are being evacuated.
Islamist militant group Boko Haram has carried out numerous attacks in the region, in a campaign of violence aimed at imposing Islamic rule in northern Nigeria.
AFP news agency quoted police as saying 17 people had been killed, as witnesses spoke of seeing bodies on the ground.
A second car is reported to have been set on fire by the blast.
In an attempt to combat the violence, the government declared a state of emergency in Borno last May, and in the neighbouring states of Adamawa and Yobe. Borno is still under emergency rule.