The phosphatidylinositol 3-kinase (PI3K) signaling pathway is a conserved signal transduction cascade that is fundamental for the correct development of the nervous system. The major negative regulator of PI3K signaling is the lipid phosphatase DAF-18/PTEN, which can modulate PI3K pathway activity during neurodevelopment. Here, we identify a novel role for DAF-18 in promoting neurite outgrowth during development in Caenorhabditis elegans. We find that DAF-18 modulates the PI3K signaling pathway to activate DAF-16/FOXO and promote developmental neurite outgrowth. This activity of DAF-16 in promoting outgrowth is isoform-specific, being effected by the daf-16b isoform but not the daf-16a or daf-16d/f isoform. We also demonstrate that the capacity of DAF-16/FOXO in regulating neuron morphology is conserved in mammalian neurons. These data provide a novel mechanism by which the conserved PI3K signaling pathway regulates neuronal cell morphology during development through FOXO.