Reverse signaling via members of the tumor necrosis factor (TNF) superfamily controls multiple aspects of immune function. Here we document TNFα reverse signaling in the nervous system to our knowledge for the first time and show that it has a crucial role in establishing sympathetic innervation. During postnatal development, sympathetic axons express TNFα as they grow and branch in their target tissues, which in turn express TNF receptor 1 (TNFR1). In culture, soluble forms of TNFR1 act directly on postnatal sympathetic axons to promote growth and branching by a mechanism that depends on membrane-integrated TNFα and on downstream activation of ERK. Sympathetic innervation density is substantially lower in several tissues in postnatal and adult mice lacking either TNFα or TNFR1. These findings reveal that target-derived TNFR1 acts as a reverse-signaling ligand for membrane-integrated TNFα to promote growth and branching of sympathetic axons.