The horrifying news comes only weeks after troops from Niger and Chad reportedly freed the town.
“They took 506 young women and children,” Damasak trader Souleymane Ali said.
“They killed about 50 of them before leaving.
“We don’t know if they killed others after leaving, but they took the rest with them.”
According to sources in the village, the militants rounded up their female captives in the main mosque before taking them away.
Two children were reportedly saved after being hid in their house by their mother.
One man had his two wives and three of his children kidnapped.
While there has been no immediate official confirmation of the kidnappers identity, it is believed that they are the Islamist group are behind the kidnappings – having previously carried out similar atrocities in northern Nigeria.
They abducted 300 schoolgirls in the region in April last year and the event caused an international outcry and spurred on a global campaign online to bring the girls back.
Nigerian, Chadian and Niger troops have reportedly drive the militants out of a string of towns, during simultaneous offensive over the last month.
Just last week they made the gruesome discovery of 70 bodies that looked to have been executed under a bridge outside of the town of Damasak. The streets their remain strewn with debris and burnt-out cars following the fighting.
The sharp increase in violence have even affected elections in Nigeria that were meant to happen last month.
One local trader said he hoped life would return to normal soon:
“We’ve seen the worst possible things you can imagine, so after a certain point there was no point in trying to leave,” he said.
“They killed all our friends, our family members, so we just submitted ourselves to God.”