ALKBH5 is the main enzyme for m6A-based demethylation of RNAs and it has been implicated in many biological and pathophysiological processes. Here, we aimed to explore the potential involvement of ALKBH5 in osteosarcoma and decipher the underlying cellular/molecular mechanisms. We discovered downregulated levels of demethylase ALKBH5 were correlated with increased m6A methylation in osteosarcoma cells/tissues compared with normal osteoblasts cells/tissues. ALKBH5 overexpression significantly suppressed osteosarcoma cell growth, migration, invasion, and trigged cell apoptosis. In contrast, inhibition of ALKBH5 produced the opposite effects. Whereas ALKBH5 silence enhanced m6A methylations of pre-miR-181b-1 and YAP-mRNA exerting oncogenic functions in osteosarcoma. Moreover, upregulation of YAP or downregulation of mature miR-181b-5p displayed a remarkable attenuation of anti-tumor activities caused by ALKBH5. Further results revealed that m6A methylated pre-miR-181b-1 was subsequently recognized by m6A-binding protein YTHDF2 to mediate RNA degradation. However, methylated YAP transcripts were recognized by YTHDF1 to promote its translation. Therefore, ALKBH5-based m6A demethylation suppressed osteosarcoma cancer progression through m6A-based direct/indirect regulation of YAP. Thus, ALKBH5 overexpression might be considered a new approach of replacement therapy for osteosarcoma treatment.