Richard Olatunde, spokesman for the Ondo State governor's office, told AFP that dynamite exploded inside the church before gunmen opened fire on worshippers attending the service.
"They did not even enter the church, they were shooting through the windows," he said, confirming a death toll of 21 people.
National Emergency Management Agency local representative Olanrewaju Kadiri said 22 people were killed, including several children, with another 40 people wounded.
Vice President Yemi Osinbajo arrived on Monday to visit some of the wounded, an AFP reporter in Owo said.
The state government declared a seven-day mourning period for the victims, and ordered the national flag to be flown at half-mast in Ondo.
The Nigerian Medical Association (NMA) on Monday also appealed to residents to donate blood for the wounded.
No group has so far claimed responsibility for the attack and the motives were not clear.
One witness told AFP he saw at least five gunmen on the church premises.
"I was passing through the area when I heard a loud explosion and gunshots inside the church," the witness, who gave his name as Abayomi, told AFP.
Nigeria's military is fighting a 12-year-long jihadist insurgency in the northeast and heavily armed criminal gangs often carry out looting raids and mass kidnappings in the northwest and north-central parts of the country.
But large-scale attacks in Nigeria's southwest are relatively rare although kidnappings for ransom have become increasingly common.
Boko Haram jihadists in the northeast have targeted churches in the past. Nigeria's jihadist conflict has killed 40,000 and displaced two million more in the northeast.
President Muhammadu Buhari condemned Sunday's "heinous killing of worshippers" while Pope Francis offered prays for the victims.
The UN Special Representative for West Africa and the Sahel, Mahamat Saleh Annadif, condemned what he called a "barbaric terrorist attack".