The accident occurred at midnight in Jigawa state's Majiya town when the tanker driver lost control of the vehicle while travelling on a highway, police spokesman Lawan Adam said.
Residents rushed to the scene and were scooping up fuel, "sparking a massive inferno," he said.
"Close to 140 people were put in a mass grave apart from people buried in other places," Nura Abdullahi, head of the National Emergency Management Agency in the region, told the Associated Press.
Emergency services say the bodies of many victims of a tanker blast were unrecognisable. (AP PHOTO)
Residents of Majiya were in mourning on Wednesday as they held a mass burial for the victims.
Most of the bodies were unrecognisable, emergency services said.
Deadly tanker accidents are common in Nigeria, Africa's most populous country, where traffic regulations are not strictly enforced in many places and there is a lack of an efficient railway system to transport cargo.
It is also common for people to salvage fuel with cups and buckets to take home after such accidents.
The practise has become more common because of soaring fuel prices, which have tripled since the start of last year as the government ended costly petrol subsidies.
The driver involved in the accident had travelled about 110km from neighbouring Kano state, police said.
The Jigawa State Emergency Management Agency initially put the death toll at 105, including those who died while being treated at hospitals.
Most other victims were "burned to ashes" at the scene of the accident, according to Dr Haruna Mairiga, head of Jigawa emergency services.
"If they knew (about the danger), they wouldn't have gone to fetch (the fuel)," Mairiga said.
He said emergency services arrived at the scene several hours after the accident.
Resident Sani Umar told local Channels Television that the fire "spread so quickly that many couldn't escape".
"People were running in all directions, screaming for help," Umar said.
"This is a heartbreaking moment for us all," state police Commissioner Ahmadu Abdullahi said.
