The diversity of neuronal cells, especially in the size and shape of their dendritic and axonal arborizations, is a striking feature of the mature nervous system. Dendritic branching is a complex process, and the underlying signaling mechanisms remain to be further defined at the mechanistic level. Here we report the identification of shrub mutations that increased dendritic branching. Single-cell clones of shrub mutant dendritic arborization (DA) sensory neurons in Drosophila larvae showed ectopic dendritic and axonal branching, indicating a cell-autonomous function for shrub in neuronal morphogenesis. shrub encodes an evolutionarily conserved coiled-coil protein homologous to the yeast protein Snf7, a key component in the ESCRT-III (endosomal sorting complex required for transport) complex that is involved in the formation of endosomal compartments known as multivesicular bodies (MVBs). We found that mouse orthologs could substitute for Shrub in mutant Drosophila embryos and that loss of Shrub function caused abnormal distribution of several early or late endosomal markers in DA sensory neurons. Our findings demonstrate that the novel coiled-coil protein Shrub functions in the endosomal pathway and plays an essential role in neuronal morphogenesis.