HRW, with support from residents of Mozambique’s conflict-stricken Cabo Delgado province, said the attack on Macomia, a city in the nation’s northern region, was carried out last week by boys as young as 13.
Residents who were forced to flee the fighting recognized some of the child soldiers as their missing relatives, the advocacy group added.
Al-Shabab, which is affiliated to the Islamic State group, has previously been accused by U.N. agencies of kidnapping children and using them as soldiers in its insurgency in Cabo Delgado, which began in 2017.
A surge of attacks by insurgents in March left at least 70 children missing, according to local authorities and a group of aid agencies.
Witnesses told HRW that dozens of child soldiers were seen carrying AK-style assault rifles and ammunition belts during the attack.
Abu Rachide, a resident of Macomia, told HRW that he recognized his 13-year-old nephew among other children.
"I saw him with my own eyes," Rachide said, adding that the boy waved at him as he marched on to complete his mission.
Rachide’s sister said the boy, who went missing earlier in the year, appeared to be taking instructions from older fighters.
"I kept wondering how he became a fighter like that in just four months," she told HRW.
In an interview with VOA, Zenaida Machado, a representative of HRW said residents who spoke to the advocacy group identified the perpetrators to be below 17 years old.
By world standards the attacks on Macomia constituted to be a war crime, Machado said.
"The information on humanitarian law is very clear about that. If you use children under 15 in conflict, that is a war crime," she said.
Mozambican media, HRW and other aid groups with operations in Macomia reported that the attacks on the northern town started on May 10 and lasted a day.
Islamist fighters looted shops and warehouses for food and exchanged fire with Mozambican and South African soldiers before retreating, reports say.
At least 10 people, mostly soldiers, were reportedly killed in the latest fighting and about 700 residents fled to nearby forests to escape the attacks, according to HRW’s report.
VOA’s Carol Van Dam contributed to this report. Some information was sourced from Associated Press.