Residents said gunmen stormed the town at roughly 4:00 am (0300 GMT) yesterday, armed with heavy weapons and tossed explosives into various buildings, forcing residents to flee into the surrounding bush.
"We are collating the figures and the death toll has risen to 60 from the Bama attack," said Lawal Tanko, the police commissioner in Borno state, which is the epicentre of Boko Haram's four-and-half-year Islamist uprising.
"The toll is likely to rise," he said. "The attackers caused enormous destruction. They burnt down some of the major landmarks in the town including the local government secretariat," and the palace of the area's top cleric, Tanko added.
"I can't say how many of the gunmen were killed but the number is huge," Tanko said.
More From This Section
The latest unrest in Nigeria's embattled northeast came as Boko Haram's leader Abubakar Shekau threated to widen his rebellion to the southern oil-producing Niger Delta region.
In a video statement delivered yesterday, Shekau promised to strike the region which churns out some two million barrels of crude per day, the highest oil output in Africa.
Boko Haram has killed thousands in the north and centre of the country since 2009 in its rebellion aimed at creating a strict Islamic state in Nigeria's north.