A Physical-layer Network Coding (PNC) scheme based on Continuous Phase Frequency Shift Keying (CPFSK) modulation, i.e., CPFSK-PNC, for two-way relay channels is proposed. Compared with the current schemes of BPSK or QPSK for PNC, the CPFSK-PNC scheme, by exploitating the technical advantage of the CPFSK method, has higher power and spectral efficiency. The detection for the relay receiver in the CPFSK-PNC scheme over Rayleigh fading channels is investigated. Firstly, in the light of the memory property of the CPFSK signal, the detection method for PNC at the relay based on the Maximum-Likelihood (ML) criterion is designed. Secondly, the minimum Euclidean distance is analyzed and the tight lower bound for the average bit error rate at the relay is derived. And finally, the simulation results verify the theoretical asymptotic derivations.