Survivor Ahmadu Gulak said the Friday blasts hit simultaneously at opposite ends of a grains and vegetables market; Press TV reported.
Gulak, who is a driver and was buying tea in the market, told The Associated Press that he had counted at least 10 bodies and dozens of wounded being ferried to a nearby hospital by ambulance.
Boko Haram Takfiri militants have been blamed for the attack on the edge of the group's Sambisa Forest stronghold, which the Nigerian military has been bombing ahead of ground assaults.
Boko Haram militants have been attacking soft targets since the military has dislodged them from towns and villages this year.
Police spokesman Othman Abubakar confirmed the explosions but said rescuers were still working and it was too early to give an exact toll.
He said it was unclear if the attacks came from bombers blowing themselves up or planted explosives.
Madagali was liberated last year after months in the hands of Boko Haram. It is 150 kilometers southeast of the biggest northeastern city, Maiduguri, which has been the epicenter of Boko Haram's seven-year insurgency.
At least 30 people were killed when a bus station near the same market was targeted by two women bombers in December 2015.
Boko Haram militants also opened fire on mourners at a funeral in Madagali in June, killing 18 people.
The group has recently regained momentum after it was nearly obliterated months ago by a joint military force made up of Nigerian government forces and troops from neighboring countries.
Boko Haram has pledged allegiance to the Daesh Takfiri terrorist group, which is mainly active in Syria and Iraq.
The United Nations has warned that areas affected by Boko Haram face a humanitarian crisis.
Boko Haram terrorists have killed more than 20,000 people and forced over 2.7 million others from their homes.
The group started its campaign with the aim of toppling the central government in Nigeria.