The highly ramified arbors of neuronal dendrites provide the substrate for the high connectivity and computational power of the brain. Altered dendritic morphology is associated with neuronal diseases. Many molecules have been shown to play crucial roles in shaping and maintaining dendrite morphology. However, the underlying principles by which molecular interactions generate branched morphologies are not understood. To elucidate these principles, we visualized the growth of dendrites throughout larval development of Drosophila sensory neurons and found that the tips of dendrites undergo dynamic instability, transitioning rapidly and stochastically between growing, shrinking, and paused states. By incorporating these measured dynamics into an agent-based computational model, we showed that the complex and highly variable dendritic morphologies of these cells are a consequence of the stochastic dynamics of their dendrite tips. These principles may generalize to branching of other neuronal cell types, as well as to branching at the subcellular and tissue levels.