The Islamists captured the town of Monguno in Borno State, which lies about 125 kilometres (80 miles) north of the state capital Maiduguri, which was targeted in a simultaneous dawn raid.
"Monguno has fallen, Monguno has fallen," said a senior military officer, who asked not to be identified because he was not authorised to speak to the media.
"We fought them all night long but they took over the town, including the military barracks there."
There was no immediate response from the military high command in Abuja when contacted by AFP but militant fighters were forced out of Maiduguri and Konduga, 40 kilometres away, local residents said.
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But Monguno's fall is potentially significant. Not only does it remove the last military base to Maiduguri from the northeast but also gives Boko Haram a free run into the key city.
"On the other hand, it may be more of Boko Haram overrunning the base with the intention of seizing as much weaponry as possible, amid concerns of a possible regional counter-insurgency operation," said Ryan Cummings of risk consultants Red 24.
Security has dominated the build-up to the February 14 presidential and parliamentary vote, as Boko Haram has intensified its attacks.
Nigeria is currently scrambling for a solution to the problem of how to allow hundreds of thousands of people displaced by the violence to vote, which has led to calls for a delay.