The attacker detonated his explosives at the entrance to the weekly market in Rumurigo village in Askira Uba district when vigilantes insisted on searching him, they said.
"The bomber arrived at the entrance of the market around 11:00 am and our men insisted on screening him as with every person going into the market but he just blew himself up, injuring a vigilante on the arm," one of the vigilantes, Markus Yohana, told AFP.
"There was an explosion around 11:05 am outside the market which caused panic and (a) stampede and we later learnt it was a suicide bomber that blew himself up at the entrance after he refused to be searched," he said.
One vigilante was injured, he said.
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The Nigerian army said the attack "was thwarted by a gallant vigilante group member."
"In the process of interrogation, the suspected terrorist blew himself off and died on the spot," spokesman Colonel Sani Kukasheka Usman said.
The wounded vigilante was being treated in hospital, he added.
Boko Haram is seeking to carve out a hardline Islamic state in northeast Nigeria.
Its insurgency has led to the deaths of at least 15,000 people since 2009.
A four-nation military offensive gathering Nigeria and its neighbours has pushed Boko Haram out of captured territory since February.
The group has reverted to previous tactics of suicide and bomb attacks against so-called soft targets such as markets and transport hubs.