Axonal branching allows a neuron to connect to several targets, increasing neuronal circuit complexity. While axonal branching is well described, the mechanisms that control it remain largely unknown. We find that in the Drosophila CNS branches develop through a process of excessive growth followed by pruning. In vivo high-resolution live imaging of developing brains as well as loss and gain of function experiments show that activation of Epidermal Growth Factor Receptor (EGFR) is necessary for branch dynamics and the final branching pattern. Live imaging also reveals that intrinsic asymmetry in EGFR localization regulates the balance between dynamic and static filopodia. Elimination of signaling asymmetry by either loss or gain of EGFR function results in reduced dynamics leading to excessive branch formation. In summary, we propose that the dynamic process of axon branch development is mediated by differential local distribution of signaling receptors. DOI: http://dx.doi.org/10.7554/eLife.01699.001.