Thursday's raid comes three days after the rebels killed 24 police in the neighbouring state of West Bengal.
Prime Minister Manmohan Singh has called the rebels the biggest threat to India's internal security.
Police said the raid by the Maoists in south Bihar's Jamui district, about 175 km (110 miles) south of state capital Patna, took the locals and police by surprise.
"So far we have recovered 11 bodies," Uday Shankar Dutta, a senior police officer, told Reuters on Thursday.
At least 20 villagers were wounded.
The rebels also set fire to 35 houses and some villagers could have burned alive, Dutta said. "We are looking for more bodies."
"The Maoists probably wanted to avenge the deaths of eight cadres who were lynched by the villagers recently," another local police officer said.
The Maoist revolt started in May 1967 as a peasant-based uprising in West Bengal's Naxalbari town, but has now spread to large swathes of countryside in more than 20 out of 28 states, especially around mineral-rich eastern and central India.