The shaping of tissues and organs in many animals relies on interactions between the epithelial cell layer and its underlying mesoderm-derived tissues. Inductive signals, such as receptor tyrosine kinase (RTK) signaling emanating from mesoderm, act on cells of the epithelium to initiate three-dimensional changes. However, how tissues are shaped in a diploblastic animal with no mesoderm remains largely unknown. In this study, the jellyfish Cladonema pacificum was used to investigate branch formation. The tentacles on its medusa stage undergo branching, which increases the epithelial surface area available for carrying nematocytes, thereby maximizing prey capture. Pharmacological and cellular analyses of the branching process suggest a two-step model for tentacle branch formation, in which mitogen-activated protein kinase kinase signaling accumulates interstitial cells in the future branch-forming region, and fibroblast growth factor signaling regulates branch elongation. This study highlights an essential role for these pluripotent stem cells in the tissue-shaping morphogenesis of a diploblastic animal. In addition, it identifies a mechanism involving RTK signaling and cell proliferative activity at the branch tip for branching morphogenesis that is apparently conserved across the animal kingdom.