Tuesday swept through farmlands north of Homs, where it said around 1,000 people had sought refuge from fighting ravaging the city in central Syria.
"The Syrian regime carried out a new massacre on Tuesday claiming 106 victims, including women and children," said the Britain-based watchdog, which relies on a network of activists and medics on the ground.
Witnesses said several members of the same family were among those killed, some in fires that raged through their homes and others stabbed or hacked to death. Among the dead were 32 members of the same clan.
Al Watan newspaper, a pro-government daily, reported army advances against "gunmen" -- the term used by the regime for insurgents -- in the area where the killings reportedly took place.
But activists on the ground quoted by the Observatory denied that rebels were present in the area, which is about five kilometres (three miles) from the Homs city centre.
Homs, dubbed "the capital of the revolution" by Syria's opposition, is the largest and most strategic province in the country, lying on key trade routes near the borders with Lebanon and Iraq, and with its southwestern areas not far from Damascus.
Troops and rebels have been battling to gain dominance in the city and the province, with many areas under siege by regime forces for more than six months.
The Observatory urged the UN to send a fact-finding team to probe the latest bloodshed.
The reported deaths were the latest to emerge from Syria, where twin blasts tore on Tuesday through an Aleppo campus while students were writing exams, killing at least 87 people.
No one claimed responsibility for the Aleppo blasts but the United States blamed government forces for the violence, suggesting they were caused by air strikes on university buildings.
"The United States is appalled and saddened by the Syrian regime's deadly attack yesterday on the University of Aleppo," State Department spokeswoman Victoria Nuland said on Wednesday.
Nuland's remarks triggered an angry response from Russia.
"I cannot imagine anything more blasphemous," said Russian foreign minister Sergei Lavrov on Thursday, describing the killings as a "terrorist act."
The Observatory said the death toll from Tuesday's blasts at Aleppo University could top 100 as many of the wounded were critically hurt, which would make it one of the bloodiest attacks of the 22-month conflict.
Rebels in Aleppo told AFP they are trying to break a months-long deadlock in their battle for Syria's second city by cutting supply routes ahead of simultaneous assaults on regime bases.
"The FSA (the rebel Free Syrian Army) is making new steps to liberate the city," Hajji Anadan, the non-military chief of the Al-Tawheed Brigade headquartered in Aleppo, said in an interview on Wednesday.
"The FSA is surrounding the city and is moving on the airports. It is cutting off the routes so the army can't get supplies or munitions," he said.
Violence erupted again in Syria on Thursday, with the Observatory reporting 11 civilians, including seven children, killed in an air strike near Damascus.
Warplanes fired three missiles on the western district of Husseiniyeh, an area in Damascus province which is home to Palestinian refugees and Syrians displaced from the Israeli-occupied Golan Heights region, the watchdog said.
More than 60,000 people, mostly civilians, have been killed in Syria's conflict, according to the United Nations, while the Observatory says it has documented more than 48,000 dead.
On Wednesday alone, 148 people were killed in violence across Syria, said the watchdog, among them 77 civilians.