Drosophila melanogaster has a single Adar gene encoding a protein related to mammalian ADAR2 that edits transcripts encoding glutamate receptor subunits. We describe the structure of the Drosophila Adar locus and use ModENCODE information to supplement published data on Adar gene transcription, and splicing. We discuss the roles of ADAR in Drosophila in terms of the two main types of RNA molecules edited and roles of ADARs as RNA-binding proteins. Site-specific RNA editing events in transcripts encoding ion channel subunits were initially found serendipitously and subsequent directed searches for editing sites and transcriptome sequencing have now led to 972 edited sites being identified in 597 transcripts. Four percent of D. melanogaster transcripts are site-specifically edited and these encode a wide range of largely membrane-associated proteins expressed particularly in CNS. Electrophysiological studies on the effects of specific RNA editing events on ion channel subunits do not suggest that loss of RNA editing events in ion channels consistently produce a particular outcome such as making Adar mutant neurons more excitable. This possibility would have been consistent with neurodegeneration seen in Adar mutant fly brains. A further set of ADAR targets are dsRNA intermediates in siRNA generation, derived from transposons and from structured RNA loci. Transcripts with convergent overlapping 3' ends are also edited and the first discovered instance of RNA editing in Drosophila, in the Rnp4F transcript, is an example. There is no evidence yet to show that Adar antagonizes RNA interference in Drosophila. Evidence has been obtained that catalytically inactive ADAR proteins exert effects on microRNA generation and RNA interference. Whether all effects of inactive ADARs are due to RNA-binding or to even further roles of these proteins remains to be determined.