N6-methyladenosine RNA (m6A) is the most abundant mRNA modification in vertebrates. While its functions in the regulation of posttranscriptional gene expression are beginning to be unveiled, precise roles of m6A during development of complex organisms remain unclear. Here we carry out a comprehensive molecular and physiological characterization of the individual component of the m6A methyltransferase complex as well as of the YTH reader proteins in Drosophila melanogaster. Components of the complex are ubiquitously expressed but show significant enrichment in the nervous system, which is consistent with the high level of m6A in this tissue. Transcriptome wide m6A profiling reveals that the modification is conserved, yet some unique features distinguish Drosophila from vertebrates. Surprisingly, mutant flies for the catalytic subunits are viable, but suffer from severe locomotion defects due to impaired neuronal functions, demonstrating the essential importance of m6A in the Drosophila nervous system. Components of the m6A methyltransferase complex also control the female-specific splicing of Sex lethal (Sxl) transcript and of its downstream targets, revealing a role for this modification in sex determination and dosage compensation. Remarkably, knock out (KO) of the nuclear m6A reader YT521-B resembles the loss of the catalytic subunits, implicating this protein as a main effector of m6A functions in vivo. Lastly, a screen to identify novel m6A players revealed few conserved candidates that regulate m6A levels and m6A-dependent RNA processing, suggesting their role as bona fide components of the methyltransferase complex. Altogether, our study substantially extends our knowledge on m6A biology, revealing the existence of novel components of the complex and demonstrating the crucial roles for this RNA modification in fundamental processes within the context of the whole animal.