Stalls and goods were reduced to debris as were the burned-out hulks of five cars and some tricycle taxis set ablaze by the explosion.
Yobe said security forces cordoned off the area but had a hard time keeping people out, though they warned there could be secondary explosions timed to target rescue efforts.
Witnesses said they saw about 50 bodies. They said the toll may be worse but fewer than normal traders and customers were around because most people stay up late to eat during Ramadan, the Muslim month of fasting from sunrise to sunset.
A security official at the scene confirmed the blast, saying many casualties are feared. He spoke on condition of anonymity because he was not permitted to speak to the press.
Explosions last week targeted the biggest shopping mall in Abuja, Nigeria's central capital, killing 24 people; a medical college in northern Kano city, killing at least eight; and a hotel brothel in northeast Bauchi city that killed 10. It was the third bomb blast in as many months in Abuja, and the second in two months in Kano. In May, twin car bombs at a marketplace also left more than 130 dead in central Jos city and killed at least 14 people at a World Cup viewing site in Damaturu, another town in the northeast.
Maiduguri, a city of more than 1 million people, has suffered many attacks. In March, twin car bombs killed more than 50 people at a late-night market where people were watching a football match on a big screen.
Boko Haram has attracted international attention and condemnation since its April abduction of more than 200 schoolgirls from a northeastern town.
Nigeria's military announced Monday night that it had busted a terrorist intelligence cell and arrested a businessman who "participated actively" in the mass abduction that caused outrage around the world.
It was unclear if the first arrest of a suspect in the kidnappings could help in rescuing at least 219 girls who remain captive. Boko Haram is threatening to sell the girls into marriage and slavery if Nigeria's government does not exchange them for detained insurgents.
Defense Ministry spokesman Maj. Gen. Chris Olukolade said in a statement that businessman Babuji Ya'ari belonged to a vigilante group fighting Boko Haram and used that membership as cover "while remaining an active terrorist."
He said information yielded by Ya'ari's detention had led to the arrests of two women — one who worked as a spy and arms procurer and another described as a paymaster.
Boko Haram has adopted a two-pronged strategy this year of bombings in urban areas and scorched-earth attacks in northeastern villages where people are gunned down and their homes burned.
On Sunday, suspected extremists sprayed gunfire on worshippers in four churches in a northeastern village and torched the buildings. At least 30 people were reported killed there.
The extremists have been attacking with more frequency and deadliness in recent months.