Transfer RNA is heavily modified and plays a central role in protein synthesis and cellular functions. Here we demonstrate that ALKBH3 is a 1-methyladenosine (m1A) and 3-methylcytidine (m3C) demethylase of tRNA. ALKBH3 can promote cancer cell proliferation, migration and invasion. In vivo study confirms the regulation effects of ALKBH3 on growth of tumor xenograft. The m1A demethylated tRNA is more sensitive to angiogenin (ANG) cleavage, followed by generating tRNA-derived small RNAs (tDRs) around the anticodon regions. tDRs are conserved among species, which strengthen the ribosome assembly and prevent apoptosis triggered by cytochrome c (Cyt c). Our discovery opens a potential and novel paradigm of tRNA demethylase, which regulates biological functions via generation of tDRs.