The development of a functional nervous system requires tight control of neurite growth and guidance by extracellular chemical cues. Neurite growth is astonishingly sensitive to shallow concentration gradients, but a widely observed feature of both growth and guidance regulation, with important consequences for development and regeneration, is that both are only elicited over the same relatively narrow range of concentrations. Here we show that all these phenomena can be explained within one theoretical framework. We first test long-standing explanations for the suppression of the trophic effects of nerve growth factor at high concentrations, and find they are contradicted by experiment. Instead we propose a new hypothesis involving inhibitory signalling among the cell bodies, and then extend this hypothesis to show how both growth and guidance can be understood in terms of a common underlying signalling mechanism. This new model for the first time unifies several key features of neurite growth regulation, quantitatively explains many aspects of experimental data, and makes new predictions about unknown details of developmental signalling.