Hundreds of people chanting "Allahu Akbar" (God is great) attacked the Kaduna office of the Lagos-based newspaper This Day on the second day of demonstrations sparked by the report.
Correspondents say Kaduna state is regarded as one of Nigeria's most volatile regions because of its large Christian as well as Muslim population.
Two years ago over 2,000 people died in communal clashes in Kaduna, before the army was eventually sent in to restore order.
Text alerts
The riot started after the paper published an article on Saturday which said that the Prophet Mohammed would have married one of the beauty queens.
The fire brigade has put down the fire in This Day's offices, but the BBC's Yusuf Sarki Muhammad in Kaduna says that the atmosphere is "chaotic".
There is debris everywhere, as well as broken furniture and burnt pieces of newspaper in the premises which are now being guarded by police.
No-one has been injured, but the staff of the newspaper have gone into hiding for fear of more attacks.
Our correspondent says that local mosques have been calling for action against the paper since yesterday.
He says that some people were first alerted to the article by text messages being sent to their mobile phones.
Death by stoning
The newspaper later retracted the story and published an apology on two separate days.
Witnesses told Reuters news agency that the rioters have vowed to attack This Day offices all over the north, where Sharia law has been introduced.
The Miss World pageant is taking place over several weeks in Nigeria, but only in the southern, largely Christian and Animist, part of the country.
Muslim groups say the contest is unIslamic.
The contest had also been threatened by a large-scale boycott by beauty queens protesting against a Sharia court's sentence of death by stoning against Amina Lawal, a woman convicted of adultery.
The Nigerian Government has moved to calm fears by promising it will not allow any Nigerian to be stoned to death.
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