The military deployed fighter jets and ground forces in pursuit of the gunmen, presumed to be Boko Haram Islamists, who have killed thousands in the region during a four-year uprising.
The barracks in the town of Bama "was in the early hours of today attacked by terrorists," said a statement from Mohammed Dole, army spokesman in Borno state, the epicentre of the Boko Haram conflict
"High calibre weapons such as anti-aircraft and rocket propelled guns were freely used in the attack that lasted several hours," the statement further said.
Those details could not be independently verified, but Nigeria has increasingly pushed its eastern neighbour Cameroon to more aggressively engage with the fight against Boko Haram.
The border is porous and the military has claimed that insurgents often escape capture by fleeing across the unmanned crossing points.
"Ground troops backed by the Air Force have repelled the attack and are in pursuit of the insurgents," Dole added, but said details on casualties were not yet available.
Residents reported that dozens, or perhaps even hundreds, of insurgents swarmed the barracks in a convoy of 4X4 trucks, armed with assault rifles, explosives and rocket-propelled-grenades.
Bama has become a flashpoint in the insurgency and the scene of several bold Islamist attacks. One of the Islamist rebels' largest-ever strikes targeted the military in Bama in June.
"A large section of the barracks" had been destroyed by fire, said another resident who asked for anonymity but identified himself as a member of the vigilante force which has formed in Borno to fight the Islamists.
Borno and two other parts of Nigeria's northeast were placed under a state of emergency in May.
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