The Islamist insurgents were thought to have controlled the town for several months, while local officials and relief workers said the area had seen a spike in Boko Haram attacks over the past two weeks.
But the military said it was now in control of Michika and was conducting "an extensive mopping up operation," after "troops sacked the terrorists who have been operating in the town and it's environ."
Some soldiers suffered injuries in the operation, defence spokesman Chris Olukolade said in a statement, adding: "Normalcy has been restored."
Military accounts of offensives against Boko Haram have in the past not been consistent with witness reports and it was not immediately possible to reach locals around Michika.
Also Read
Retaking Michika from Boko Haram, which controls large swathes of territory across the northeast, would mark a success for Nigeria's military, which has been fiercely criticised for its handling of the six-year Islamist uprising.
Nigeria heads to the polls in two weeks and the brutal conflict has played a central role in the campaigns between President Goodluck Jonathan and his challenger, former military dictator Muhammadu Buhari.
"Nigerian officers... Are in the process of accounting for their actions leading to the loss of weapons (and) men," in northern Borno, Olukolade said, providing no further specifics.
There were unconfirmed reports on Thursday that Chadian fighter jets and ground forces were operating in the area as part of a new cooperation with Nigeria to contain the insurgency.
The conflict has killed more than 13,000 people since 2009.