Microsatellite repeat expansions within genes contribute to a number of neurological diseases1,2. The accumulation of toxic proteins and RNA molecules with repetitive sequences, and/or sequestration of RNA-binding proteins by RNA molecules containing expanded repeats are thought to be important contributors to disease aetiology3-9. Here we reveal that the adenosine in CAG repeat RNA can be methylated to N1-methyladenosine (m1A) by TRMT61A, and that m1A can be demethylated by ALKBH3. We also observed that the m1A/adenosine ratio in CAG repeat RNA increases with repeat length, which is attributed to diminished expression of ALKBH3 elicited by the repeat RNA. Additionally, TDP-43 binds directly and strongly with m1A in RNA, which stimulates the cytoplasmic mis-localization and formation of gel-like aggregates of TDP-43, resembling the observations made for the protein in neurological diseases. Moreover, m1A in CAG repeat RNA contributes to CAG repeat expansion-induced neurodegeneration in Caenorhabditis elegans and Drosophila. In sum, our study offers a new paradigm of the mechanism through which nucleotide repeat expansion contributes to neurological diseases and reveals a novel pathological function of m1A in RNA. These findings may provide an important mechanistic basis for therapeutic intervention in neurodegenerative diseases emanating from CAG repeat expansion.