"I saw many dead bodies lying on the ground, many dead, and several others badly injured," said fish seller Idi Idrisa.
People are still counting the dead but a security officer said the explosion at Baga fish market was massive. He said he counted at least 10 corpses. He spoke on condition of anonymity because he is not authorised to speak to reporters.
It has increased suicide bombings and village attacks recently as forces from Nigeria and Chad have driven the insurgents from a score of towns along Nigeria's border with Cameroon.
Boko Haram also has attacked villages in Cameroon and Niger as Nigeria's neighbours are forming a multinational force to confront the spreading Islamic uprising.
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Chad's President Idris Deby this week said his forces know the whereabouts of Boko Haram leader Abubakar Shekau and warned him to surrender or face certain death.
Boko Haram fighters are massing at their headquarters in the northeastern town of Gwoza, in apparent preparation for a showdown with multinational forces, according to witnesses who escaped from the town.
About 12,000 people have died in the nearly 6-year-old insurgency centered in northeastern Nigeria.