Stereotyped dendritic arbors are shaped by dynamic and stochastic growth during neuronal development. It remains unclear how guidance receptors and ligands coordinate branch dynamic growth, retraction, and stabilization to specify dendritic arbors. We previously showed that extracellular ligand SAX-7/LICAM dictates the shape of the PVD sensory neuron via binding to the dendritic guidance receptor DMA-1, a single transmembrane adhesion molecule. Here, we perform structure-function analyses of DMA-1 and unexpectedly find that robust, stochastic dendritic growth does not require ligand-binding. Instead, ligand-binding inhibits growth, prevents retraction, and specifies arbor shape. Furthermore, we demonstrate that dendritic growth requires a pool of ligand-free DMA-1, which is maintained by receptor endocytosis and reinsertion to the plasma membrane via recycling endosomes. Mutants defective of DMA-1 endocytosis show severely truncated dendritic arbors. We present a model in which ligand-free guidance receptor mediates intrinsic, stochastic dendritic growth, while extracellular ligands instruct dendrite shape by inhibiting growth.