The warring sides blamed each other for the attack on the open-air weekly cattle market in Sangin district, where hundreds of villagers from neighboring districts had gathered to trade sheep and goats.
A spokesman for Helmand's governor said several rockets fired by Taliban insurgents landed close to the cattle market, killing 23 civilians, including children.
Qari Yousuf Ahmadi, a Taliban spokesman said the Afghan army fired several rounds of mortar bombs on civilian houses and the cattle market, killing dozens of villagers.
Khushakyar, who goes by a single name, said he was trying to sell a calf when the rockets hit the market. He said his two nephews were killed and his son was wounded.
"I saw around 20 bodies on the ground," he said, adding that dozens were wounded and "livestock lay dead next to men."
Some residents of Helmand province, a Taliban stronghold, said the shelling occurred during fierce clashes between Taliban militants and government security forces in residential areas surrounding the market.
There has been an uptick in violence by the Taliban against the Afghan government, even though the insurgents, fighting to reintroduce strict Islamic law after being ousted from power in 2001, signed a troop withdrawal agreement with the United States in February designed to lead to peace negotiations with the Afghan government.
More than 500 civilians were killed and 760 others wounded because of fighting in Afghanistan in the first three months of 2020, the UN Assistance Mission in Afghanistan (UNAMA) said in late April.