To form functional neural circuits, neurons migrate to their final destination and extend axons towards their targets. Whether and how these two processes are coordinated in vivo remains elusive. We use the zebrafish olfactory placode as a system to address the underlying mechanisms. Quantitative live imaging uncovers a choreography of directed cell movements that shapes the placode neuronal cluster: convergence of cells towards the centre of the placodal domain and lateral cell movements away from the brain. Axon formation is concomitant with lateral movements and occurs through an unexpected, retrograde mode of extension, where cell bodies move away from axon tips attached to the brain surface. Convergence movements are active, whereas cell body lateral displacements are of mainly passive nature, likely triggered by compression forces from converging neighbouring cells. These findings unravel a previously unknown mechanism of neuronal circuit formation, whereby extrinsic mechanical forces drive the retrograde extension of axons.