Nigerian army officials said Christians of a town in Shendam district attacked their Muslim neighbours on Thursday to avenge the earlier killing of about 90 of their own people in a neighbouring town.
"When we arrived yesterday the whole place was in flames," an army official said.
"I saw not less than 25 bodies on the road entering town, and in total there were 40 to 50 killed," he said.
The attacks used cutlasses and swords, slashing their victim's throats and then burning their bodies.
About 10,000 people have died in communal and religious violence in Nigeria since 1999 when President Olusegun Obasanjo was first elected to end 15 years of military rule in Africa's most populous nation.
Troops and riot police have mounted roadblocks in the troubled area to try to stop the fighting from spreading.