Boko Haram, which is sometimes called the Nigerian Taliban, launched a series of attacks on police stations Sunday.
President Umaru Yar'Adua, who is himself a Muslim from the north, authorised the army to take whatever action was necessary to restore order.
The police and army quickly struck back with brutal force. At least 300 people are believed to have died, the majority of them militants, although civilians are also among the dead.
Earlier, a Prensa Latina report said that 600 people were killed in the violence.
Nigeria, Africa's most populous nation with around 150 million inhabitants, is split between the Muslim north and the Christian and animist south.
The north has been gradually implementing stricter Islamic law, which has led to trouble with Christian groups.
Clashes in Bauchi state earlier this year left five people dead and several churches and mosques gutted by fire.
Hundreds died in the city of Jos, the capital of Plateau State, last November when local elections degenerated into bloody clashes.
However, radical Islamism has not taken root in the same way as across much of North Africa. Analysts say this is due to a strong sense of cultural and religious identity in northern Nigeria.
The north is Nigeria's poorest region, and observers say that outbreaks of localised violence that have killed thousands in recent years have their roots in this poverty.