N6-methyladenosine (m6A) is the most abundant internal modification in mammalian messenger RNA (mRNA). It is deposited by writer proteins and can be reversed by erasers. Fat mass and obesity-associated (FTO) protein was the first RNA demethylase shown to catalyze the oxidative demethylation of m6A in mRNA. This discovery reignited investigations of m6A biology. FTO was later shown to demethylate m6Am near mRNA 5’ cap (cap-m6Am). To address the question of which substrate on mRNA is the preferentially cellular substrate of FTO, I comprehensively characterized the substrate spectrum of FTO inside cells, and clarified internal m6A as the main substrate contributing to FTO-mediated mRNA stability regulation. In terms of in vivo physiological significance of FTO, Fto knockout (KO) mice exhibit severe developmental defects, yet the primary physiological substrates of FTO and the related functional pathways during mammalian development and in mammalian tissues remained elusive. A major part of my doctoral work showed for the first time that FTO mediates m6A demethylation of repeat RNAs in mouse embryonic stem cells (mESCs), especially the long-interspersed element-1 family (LINE1) RNAs, thereby regulating their abundance to affect chromatin state. Our analysis further revealed FTO-mediated LINE1 RNA m6A demethylation associated with chromatin state regulation as a prevalent process in mammalian tissues, which also plays critical roles during early development. Additionally, in two collaborative studies, we investigated the context-dependent functions of FTO and demonstrated how FTO is regulated depending on the cellular stress in cancers. Collectively, these findings reveal RNA m6A-mediated chromatin and transcriptional regulation as an additional layer to gene expression regulation by reversible RNA methylations, and expand the understanding of the context-dependent regulations and functions of FTO and RNA m6A demethylation.