We have identified a homolog of the ADAR (adenosine deaminases that act on RNA) class of RNA editases from Drosophila, dADAR. The dADAR locus has been localized to the 2B6-7 region of the X chromosome and the complete genomic sequence organization is reported here. dADAR is most homologous to the mammalian RNA editing enzyme ADAR2, the enzyme that specifically edits the Q/R site in the pre-mRNA encoding the glutamate receptor subunit GluR-B. Partially purified dADAR expressed in Pichia pastoris has robust nonspecific A-to-I deaminase activity on synthetic dsRNA substrates. Transcripts of the dADAR locus originate from two regulated promoters. In addition, alternative splicing generates at least four major dADAR isoforms that differ at their amino-termini as well as altering the spacing between their dsRNA binding motifs. dADAR is expressed in the developing nervous system, making it a candidate for the editase that acts on para voltage-gated Na+ channel transcripts in the central nervous system. Surprisingly, dADAR itself undergoes developmentally regulated RNA editing that changes a conserved residue in the catalytic domain. Taken together, these findings show that both transcription and processing of dADAR transcripts are under strict developmental control and suggest that the process of RNA editing in Drosophila is dynamically regulated.