The refinement of neural circuits during development depends on a dynamic process of branching of axons and dendrites that leads to synapse formation and connectivity. The neurotrophin brain-derived neurotrophic factor (BDNF) is essential for the outgrowth and activity-dependent remodeling of axonal arbors in vivo. However, the mechanisms that translate extracellular signals into the formation of axonal branches are incompletely understood. We found that MAP kinase phosphatase-1 (MKP-1) controls axon branching. MKP-1 expression induced by BDNF signaling caused spatiotemporal deactivation of c-jun N-terminal kinase (JNK), which reduced the phosphorylation of JNK substrates that destabilize microtubules. Indeed, neurons from mkp-1 null mice could not produce axon branches in response to BDNF. Our results identify a signaling mechanism that regulates axonal branching and provide a framework for studying the molecular mechanisms of innervation and axonal remodeling under normal and pathological conditions.