Peptide:N-glycanases (PNGases) are cytoplasmic de-N-glycosylation enzymes that have been shown in cultured cells to facilitate the degradation of misfolded glycoproteins during endoplasmic reticulum-associated degradation and in the processing of major histocompatibility complex class I antigens for proper cell-surface presentation. The gene encoding PNGase activity was initially described in budding yeast (Png1p) and shown to be highly conserved from yeast to humans, but physiological roles in higher organisms have not been elucidated. Here we describe peripheral nervous system defects associated with the first loss-of-function mutations in an animal PNGase. Mutations in png-1, the Caenorhabditis elegans PNGase ortholog, result in an increase in axon branching during morphogenesis of the vulval egg-laying organ and egg-laying behavior changes. Neuronal defects include an increase in the branched morphology of the VC4 and VC5 egg-laying neurons as well as inappropriate branches from axons that run adjacent to the vulva but would normally remain unbranched. We show that png-1 is widely expressed and can act from both neurons and epithelial cells to restrict axon branching. A deletion allele of the DNA repair gene rad-23, orthologs of which are known to physically interact with PNGases in yeast and mammals, displays similar axon branching defects and genetic interactions with png-1. In summary, our analysis reveals a novel developmental role for a PNGase and Rad-23 in the regulation of neuronal branching during organ innervation.