Army spokesman Sagir Musa blamed the pre-dawn attack on al-Qaida-linked Boko Haram militants, and said the strike targeted the town of Bama, a remote settlement near the borders of Cameroon and Chad.
Musa told reporters that gunmen entered the town in trucks and buses mounted with machine guns, and that barracks and government buildings were burned to the ground during the nearly five-hour assault. He said 10 insurgents, 22 police officers and several children were among the dead, and that militants freed more than 100 prisoners.
Boko Haram, which is seeking to carve out an Islamist state in northern Nigeria, has also been linked to an attack in April on the nearby Lake Chad fishing village of Baga.
Nearly 200 people were killed in the Baga attack, prompting Nigerian President Goodluck Jonathan to order a full scale probe to determine what, if any, role the military played in the deaths.
Authorities blame Boko Haram for dozens of deadly bombings and shootings in northern Nigeria since the militant group first launched its uprising in 2009 from Bama.
Since then, Human Rights Watch says Boko Haram-related violence has killed 3,000 people, a toll that includes killings by security forces.