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Witnesses in Bambari, 380km northwest of the capital Bangui, said an initial attack early on Monday (local time) by mainly Christian militia on its outskirts led to waves of reprisals by Muslim youths and fighting inside the town.
Bambari sits on a sectarian fault line now cleaving the country, where over a year of violence has killed thousands, forced a million from their homes and led to most Muslims fleeing into northern zones closer to Chad and Sudan.
The violence in the landlocked ex-French colony dates to the takeover last year of Bangui by the mostly Muslim Seleka rebel group, whose time in power was marked by a string of rights abuses, leading to the creation of the Christian militia.
Seleka stepped down earlier this year under intense international pressure but a weak interim government has failed to stamp its authority on the country, which is rich in gold and diamonds but seen little but violence and political instability.
Ibrahim Alawad, a witness in Bambari, said he had counted at least 22 bodies in the village of Liwa, about 7km from Bambari, after the initial attack by Christian militia known as "anti-Balaka".
"Some had been cut to pieces, some had their hearts cut out. I saw about five children and six women."
Citing reports from other witnesses, he added: "After that the youth of the Muslim area went there. They killed about 10 anti-Balaka."
Robert Ponsien, a doctor and project coordinator for medical aid agency MSF in Bambari, said rising tension there triggered clashes on Monday during which 34 people were killed, while another 17 were killed in Liwa.
"There was a lot of violence. In the hospital, we had 28 wounded by gunshot and machete," Ponsien told Reuters by telephone, adding that the upsurge of violence forced several hundreds to flee to Bambari's Catholic church premises.
There was no immediate comment from the government.
Captain Sebastien Isern, spokesman for Sangaris, the French peacekeeping force in the country, said the situation in Bambari degenerated after peacekeeping troops left the town for Liwa to investigate the initial attack.
He said the French force had sent a helicopter over Bambari Tuesday afternoon to discourage violence on the ground, but he denied a witness's account that the aircraft had opened fire.
Antoine Mbao Bogo, president of the local Red Cross, said fighting was continuing on Tuesday and it was too early for Red Cross staff to collect bodies.
A witness at the Catholic Church in Bambari said Muslims who went to Liwa after the initial attack began shooting at people and burning houses in revenge once they returned to Bambari on Monday.
"It was revenge ... there were many dead yesterday," said the witness, who gave her name only as Marie-Rosalie. She said she had counted five bodies near the church but had received reports of as many as 100 lying in the town's morgue.
Earlier this month, President Catherine Samba-Panza asked the International Criminal Court to open an investigation into crimes committed during inter-communal violence raging in Central African Republic since mid-2012.