They also hoisted their black and white flag over a town left undefended by Nigeria's military, just 53 miles from the north-eastern state capital of Maiduguri.
Hundreds of villagers in another north east area, Askira Uba, are fleeing after receiving letters from the Islamic extremists threatening to attack and take over their areas.
Survivors said insurgents fired rocket-propelled grenades and lobbed home-made bombs into homes, and then gunned down people as they tried to escape the attack on the town of Damboa.
A human rights advocate said the extremists struck again as people were trying to bury the dead and said the death toll is probably much higher than 100. The only defence reportedly came from vigilantes armed with clubs and home-made rifles.
The town had been under siege for two weeks since Boko Haram dislodged soldiers from its outskirts.