Small nuclear RNAs (snRNAs) are core spliceosome components and mediate pre-mRNA splicing. Here we show that snRNAs contain a regulated and reversible nucleotide modification causing them to exist as two different methyl isoforms, m₁ and m₂, reflecting the methylation state of the adenosine adjacent to the snRNA cap. We find that snRNA biogenesis involves the formation of an initial m₁ isoform with a single-methylated adenosine (2′-O-methyladenosine, Am), which is then converted to a dimethylated m₂ isoform (N⁶,2′-O-dimethyladenosine, m⁶Am). The relative m₁ and m₂ isoform levels are determined by the RNA demethylase FTO, which selectively demethylates the m₂ isoform. We show FTO is inhibited by the oncometabolite d-2-hydroxyglutarate, resulting in increased m₂-snRNA levels. Furthermore, cells that exhibit high m₂-snRNA levels show altered patterns of alternative splicing. Together, these data reveal that FTO controls a previously unknown central step of snRNA processing involving reversible methylation, and suggest that epitranscriptomic information in snRNA may influence mRNA splicing.