Military planes carried out at least two air strikes on Laukkai city, normally home to some 25,000 people, late on Thursday night, a resident told AFP, requesting anonymity for security reasons.
Local media quoted one resident as saying 10 civilians were killed in the strike.
Myanmar's northern Shan state has been rocked by fighting since late June when an alliance of ethnic minority armed groups renewed an offensive against the military along a major trade highway to China.
The Myanmar National Democratic Alliance Army (MNDAA) group have held Laukkai since January after more than 2,000 junta troops surrendered there in one of the military's biggest defeats in decades.
MNDAA spokesman Li Jiawen told AFP a military airstrike had hit a hospital in Laukkai, but he had no information yet on casualties.
The junta has been approached for comment.
The junta has bombed Laukkai several times in recent weeks after the MNDAA renewed its offensive in northern Shan state, shredding a Beijing-brokered ceasefire.
Pictures taken on Thursday and shared with AFP by the Laukkai resident showed deserted streets.
In recent days MNDAA fighters have entered the town of Lashio, also in northern Shan state and home to the military's northeastern command.
Fighting was ongoing in Lashio on Friday, a military source told AFP, requesting anonymity to talk to the media.
Local media, citing a local resident, reported that MNDAA fighters had entered a military hospital in Lashio and killed an unspecified number of patients and medical staff.
AFP was unable to reach people on the ground in Lashio or confirm the report.
Dozens of civilians have been killed or wounded in the recent fighting in Shan state according to the junta and local rescue groups.
Neither the junta nor the ethnic alliance have released figures on their own casualties.
Myanmar's borderlands are home to myriad ethnic armed groups who have battled the military since independence from Britain in 1948 for autonomy and control of lucrative resources.
Some have given shelter and training to newer "People's Defence Forces" (PDFs) that have sprung up to battle the military after the coup in 2021.
China is a major ally and arms supplier to the junta, but analysts say it also maintains ties with armed ethnic groups in Myanmar that hold territory near its border.
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