The militants attacked several northern cities with explosives and gunfire as soldiers and police went in pursuit.
The country's chief of army staff, General Azubuike Ihejirika said the attacks started on Thursday by militants of the radical Boko Haram sect that wants to impose Sharia law in the region.
According to him, four soldiers were also killed but the radicals were dislodged from their key stronghold in Damaturu which is also the capital of Gombe state.
The fighting later spread to nearby cities of Potiskum and the capital of Borno state Maiduguri. The militants threw explosives and a fire fight ensued with the military.
Panicked residents fled for safety in Damaturu. Different security sources gave varied casualty figures, and eye witnesses said the number of dead could surpass 100, and the dead included civilians who died after being hit by stray bullets.
Police commissioner in Yobe state, Lawan Tanko said 15 members of Boko Haram, a civilian and seven police officers died, but added that the figure was provisional.
A resident who spoke to PTI on phone said the number of dead persons on the street of Damaturu alone surpasses 70 and many are being taken to hospital morgues. Sources in the town said noisy explosions were heard in the Pompomari area which is near the traditional ruler's palace on Thursday and Friday.
In Maiduguri, explosions started at noon yesterday near In Maiduguri, explosions started at noon yesterday near the Nigeria customs office.
Residents scampered for safety while two Christian churches were destroyed by blasts.
The military deployed amoured vehicles and several fighting equipment and as civilians, mostly women and children were seen leaving the area in droves.
A spokesman for Boko Haram, Abdul Qaqa said his group was responsible for the attacks which were launched to avenge the killing of some of their members by the security forces.
He vowed that his group will not relent until Sharia rule has been established in Nigeria. Tension has been rising in Africa's major oil producing nation as festive seasons of Christmas and New Year approach.
Militants strike hard during such seasons. Boko Haram claims to be on a mission to install Islamic sharia rule in northern Nigeria and its principles abhor western education.
It has claimed responsibility for several bombings and shootings in the north and capital city of Abuja. A suicide bomb attack by the group at the United Nations headquarters in July killed 26 persons.
Boko Haram's leader, Muhammed Yusuf was killed in 2006 during an insurrection which claimed more than 800 lives.