The AlkB family of nonheme Fe(II)/2-oxoglutarate-dependent oxygenases are essential regulators of RNA epigenetics by serving as erasers of one-carbon marks on RNA with release of formaldehyde (FA). Two major human AlkB family members, FTO and ALKBH5, both act as oxidative demethylases of N6-methyladenosine (m6A) but furnish different major products, N6-hydroxymethyladenosine (hm6A) and adenosine (A), respectively. Here we identify foundational mechanistic differences between FTO and ALKBH5 that promote these distinct biochemical outcomes. In contrast to FTO, which follows a traditional oxidative N-demethylation pathway to catalyze conversion of m6A to hm6A with subsequent slow release of A and FA, we find that ALKBH5 catalyzes a direct m6A-to-A transformation with rapid FA release. We identify a catalytic R130/K132/Y139 triad within ALKBH5 that facilitates release of FA via an unprecedented covalent-based demethylation mechanism with direct detection of a covalent intermediate. Importantly, a K132Q mutant furnishes an ALKBH5 enzyme with an m6A demethylation profile that resembles that of FTO, establishing the importance of this residue in the proposed covalent mechanism. Finally, we show that ALKBH5 is an endogenous source of FA in the cell by activity-based sensing of FA fluxes perturbed via ALKBH5 knockdown. This work provides a fundamental biochemical rationale for nonredundant roles of these RNA demethylases beyond different substrate preferences and cellular localization, where m6A demethylation by ALKBH5 versus FTO results in release of FA, an endogenous one-carbon unit but potential genotoxin, at different rates in living systems.