Axonal degeneration is a characteristic feature of neurodegenerative disease and nerve injury. Here, we characterize axonal degeneration in Caenorhabditis elegans neurons following laser-induced axotomy. We show that this process proceeds independently of the WLDS and Nmnat pathway and requires the axonal clearance machinery that includes the conserved transmembrane receptor CED-1/Draper, the adaptor protein CED-6, the guanine nucleotide exchange factor complex Crk/Mbc/dCed-12 (CED-2/CED-5/CED-12), and the small GTPase Rac1 (CED-10). We demonstrate that CED-1 and CED-6 function non-cell autonomously in the surrounding hypodermis, which we show acts as the engulfing tissue for the severed axon. Moreover, we establish a function in this process for CED-7, an ATP-binding cassette (ABC) transporter, and NRF-5, a lipid-binding protein, both associated with release of lipid-vesicles during apoptotic cell clearance. Thus, our results reveal the existence of a WLDS/Nmnat-independent axonal degeneration pathway, conservation of the axonal clearance machinery, and a function for CED-7 and NRF-5 in this process.