The Boko Haram militants
opened fire on Dalori village near Maiduguri, in Nigeria's northern Borno state.
Some residents fled into the bush and watched as attackers torched their homes Saturday night.
At least 65 people were killed and 136 others injured, the National Emergency Management Agency said on Twitter, though some accounts put the death toll higher.
Borno State Health Commissioner Haruna Mshelia said Monday that 85 people were killed while 16 others were missing.
"Some women were kidnapped by the Boko Haram gunmen, but I don't know how many they were," said Mohammed Kanar, the emergency agency chief .
'We had just finished evening prayers'
The attack happened Saturday night, right after evening prayers.
"We had just finished evening prayers when the gunmen came to our village and indiscriminately opened fire and set fire to homes," resident Kulo Sheriff said.
"They detonated two bombs, which added to our fright and confusion. Everybody fled into the bush from where we saw our homes burning."
Some local media reported 20 or more of the victims were burned alive in their homes in the attack.
'We slept in the bush'
Resident Adamu Kyari gave a similar account.
"We slept in the bush with no blankets despite the chilling weather," Kyari said. "We could hear soldiers battling with the Boko Haram attackers. It was terrifying."
As people fled toward a nearby village, three women in suicide vests tried to make their way into a crowd, the military official said. They "were intercepted and subsequently got blown up," he said.
Dalori is near the largest camp for those displaced by the terror group's violence. It houses around 20,000 people.
The militant group has attacked the nation's north for years.
Its aim is to impose a stricter enforcement of Sharia law across Africa's most populous nation, which is split between a majority Muslim north and a mostly Christian south.
As the world remains transfixed on Syria-based ISIS
, which has hit western nations, Boko Haram
's attacks have escalated.
The group has bombed schools, churches and mosques; kidnapped women and children; and assassinated politicians and religious leaders alike.
Last year, Boko Haram claimed the morbid title of deadliest terror group for its killings in Nigeria, Chad and Cameroon.
The extremist group, based in northern Nigeria, killed 6,644 people in 2014, an increase of more than 300% from the previous year, according to the latest tally from the Global Terrorism Index.
It killed more people than ISIS, to which it reportedly pledged allegiance last year, the report says.