Internal bases in mRNA can be subjected to modifications that influence the fate of mRNA in cells. One of the most prevalent modified bases is found at the 5' end of mRNA, at the first encoded nucleotide adjacent to the 7-methylguanosine cap. Here we show that this nucleotide, N,2'-O-dimethyladenosine (mA), is a reversible modification that influences cellular mRNA fate. Using a transcriptome-wide map of mA we find that mA-initiated transcripts are markedly more stable than mRNAs that begin with other nucleotides. We show that the enhanced stability of mA-initiated transcripts is due to resistance to the mRNA-decapping enzyme DCP2. Moreover, we find that mA is selectively demethylated by fat mass and obesity-associated protein (FTO). FTO preferentially demethylates mA rather than N-methyladenosine (mA), and reduces the stability of mA mRNAs. Together, these findings show that the methylation status of mA in the 5' cap is a dynamic and reversible epitranscriptomic modification that determines mRNA stability.