The would-be bomber detonated his explosives a few metres (yards) from an open-air mosque in the Dogo Tebo area of Potiskum shortly after afternoon prayers.
"Three worshippers were hit by shrapnel and sustained mild injuries while the bomber's thighs and legs were blown off," said local resident Mukhtar Ubale in an account supported by two others.
Another resident who witnessed the explosion, Zakari Kabiru, said the bomber, thought to be aged about 30, was taken to hospital but his chances of survival were slim.
"Only his torso was intact but the lower parts of his body were shattered," he said, blaming the Sunni jihadist group Boko Haram for the attack.
Boko Haram, whose insurgency to create a hardline Islamic state in northeast Nigeria has killed at least 15,000 since 2009, condemns Shias as heretics who should be killed.
The group has carried out several suicide and bombing attacks on Potiskum, which is the commercial hub of Yobe state and one of the worst hit by the violence.
Last November at least 15 people were killed and dozens injured from a suicide attack on a Shia Muslim Ashura festival procession, which marks the death of Hussein, grandson of the Prophet Mohammed.
Gun attacks by soldiers that followed left several others dead.
In July 2014, a blast rocked the same Saqafa mosque shortly after evening prayers, leaving four dead.
A second explosion went off moments later at a mosque in the town's Anguwar Bolawa area, in the compound of the chief imam, killing at least two worshippers.
A four-nation military offensive of Nigeria and its neighbours has pushed Boko Haram out of captured territory since February.