The blast happened on Monday in the city of Potiskum, as Shiite Muslims were marking the religious occasion.
The worshippers were gathered outside a seminary in the Tsohuwar Kasuwa area of the city, after visiting the palace of the local emir, witness Ibrahim Maina and local police told the AFP news agency.
"It was a huge crowd and many of them were affected," the policemen told AFP. "The priority is to rescue the injured."
The type of blast has not yet been confirmed, and no one has claimed responsibility for the attack.
Boko Haram, declared a "terrorist" organisation by Nigeria and the United States, has been fighting to create an Islamic state in Nigeria's mainly Muslim north.
Yobe is one of three northeastern states which was placed under emergency rule last year when the military launched a massive operation to crush the Boko Haram.
More than 1,000 people have been killed in the region since the emergency measures were imposed, despite the enhanced military presence.