Damaturu - Boko Haram militants attacked the town of Buni Yadi in Yobe state late on Thursday and it was unclear how the fighting had ended, military sources said.
There was no information on any casualties after the attack that started at around 9 p.m., the sources said on Friday.
A detachment of troops with armoured personnel carriers and a fighter jet were seen heading towards Buni Yadi on Friday morning.
"Those boys (Boko Haram) came to Buni Yadi yesterday and attacked our people. They came in about nine Hilux (pick-up trucks) and opened fire... Our people have mobilised for reinforcement," one the sources said.
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Buni Yadi was one of the towns that was captured by the insurgent group in 2014 and then reclaimed in March this year by the army.
Boko Haram took over large swathes of territory last year but were pushed back into their last stronghold in the Sambisa forest reserve with the combined efforts of Nigerian and regional forces.
The militants have since dispersed and reverted to guerrilla tactics and including hitting towns well outside its Borno state heartland such as in Kaduna and Plateau states over the last two weeks.
President Muhammadu Buhari has made quashing the insurgency his number one priority and is building up a base in Chad's capital N'Djamena out of which regional forces can deploy and attack the militants.