The incident happened when people were attending morning prayers on Wednesday in Gezawa area of Kano state.
Residents said flames engulfed the mosque after the attack with worshippers heard wailing as they struggled to open the locked doors.
After hearing the explosion, neighbours rushed to help those trapped inside, local media reported.
Rescue teams including bomb experts from Kano were immediately deployed in response to the attack, a police statement said.
Police later confirmed that a bomb was not used in the attack.
The Fire Service in Kano said they were not called immediately the fire started, adding that they could have brought the situation under control much faster.
Kano Fire Service spokesman Saminu Yusuf told the BBC that they got reports of the incident after locals had put out the fire.
“In a situation like this, people are supposed to call us but we didn’t get any call from the location until after normalcy had returned,” Mr Yusuf added.
Police said the suspect confessed that his actions were part of a dispute over inheritance, claiming he was targeting some family members who were inside the mosque.
“What happened is not associated with any act of terrorism, rather it was a skirmish that arose as a result of inheritance distribution,” Umar Sanda, a local police chief, told journalists after visiting the scene.
“It is really unfortunate,” Mr Sandahe added.
“The suspect is presently with us and is giving out useful information.”
Initial reports said one worshipper had died from the attack but the death toll later rose after more victims died while receiving treatment at the Murtala Muhammad Specialist Hospital in Kano.
More victims, including children, are still receiving treatment at the hospital, according to police.