The captives, women and children amongst them, were "held as slaves and engaged in forced labor." Nearly 1,500 people have been rescued from abusive Islamic institutions since September.
Nigerian police freed 259 people, including women and children, from an Islamic "rehabilitation center" in the southwestern city of Ibadan on Tuesday following a tip-off a day earlier.
Images from local television showed the captives, a group of mostly young men, being released.
The inmates were locked up in a building where they were "held as slaves and engaged in forced labor," Shina Olukolu, police commissioner for Oyo state told journalists.
Images of the captives' release from local TV station TVC showed a group of mostly young men and teenaged boys, many of whom were emaciated.
"We eat one meal a day," freed captive Olalekan Ayoola told TVC, adding that the food wasn't fit for a dog to eat.
Olukolu said the police suspect some of the captives could have died while being held because authorities found a grave on the site, though no deaths had been reported previously.
The facility's owners told police they had been running a rehabilitation home where inmates learned the Koran.
The owners claimed to police that the inmates' relatives brought them there. At least five people were arrested at the site, a police spokesperson said.
This most recent rescue brings the number of people freed from abusive institutions since September to nearly 1,500, when the country began a crackdown on informal Islamic schools and rehabilitation centers.
The crackdown was sparked by a man being refused permission to visit his nephews at one institution and complaining to police.
Many captives have said they were sexually and physically abused, and chained up to stop them from escaping.
Nigeria group Muslim Rights Concern estimates roughly 10 million children attend Islamic institutions in the country.
Islamic schools, known as Almajiris, are common in the north of the West African country, and are plagued by allegations of abuse and that the children are forced to beg in the streets.