The bomb, planted in a three-wheel rickshaw taxi, exploded outside the state television offices at about 1.30pm (1230 GMT), witnesses told Reuters.
"My men counted 17 dead as at 2:00pm and they are still counting. I have instructed my men to go to the University of Maiduguri Teaching Hospital and the state specialist hospital to verify if there are others," said Borno Police Commissioner Lawan Tanko.
"I saw two boys on the ground and their bodies cut into pieces, two other cars immediately caught fire and I ran away because there was too much blood," city resident Aisha Hassan told Reuters.
Soldiers fired shots into the air to disperse crowds before cordoning off the roads around the bomb site, witnesses said.
Dozens of youths, some armed with machetes, protested on the street after the attack, accusing politicians of failing to curb violence in Maiduguri, they said.
No one claimed responsibility for the blast.
Maiduguri is the capital of Borno state and the focal point of an armed rebellion waged by Boko Haram, which wants to create an Islamic state in the north of Africa's most populous nation and top oil exporter.
President Goodluck Jonathan stepped up a military campaign against the group in May last year. But experts say it has not stemmed the violence which killed thousands last year.
Boko Haram has continued to attack schools and government and military targets in the face of the army crackdown on its four-year-old revolt.
On December 2, hundreds of its fighters in trucks and a stolen armoured personnel carrier attacked an air force base and international airport on the outskirts of Maiduguri in one of the armed group's most daring attacks.
Two helicopters and three decommissioned military aircraft were heavily damaged in the attack.