"It is sad as we have been made to understand that Marte has today completely fallen under the control of the insurgents, which to us is a very huge setback," said Mustapha Zannah, vice governor of the Borno state.
The town, located along a strategic trading route between Nigeria and neighbouring Cameroon and Chad, has traded hands between the jihadists and government troops numerous times since 2013.
A regional military coalition of Nigeria, Niger, Chad and Cameroon has claimed a series of major victories against Boko Haram since launching sweeping offensives against the jihadists in February.