Faster boot times: Windows Me features numerous improvements for improving cold boot time, pre and post-logon boot times and time required for resuming from hibernation. Processing of real mode configuration files, CONFIG.SYS and AUTOEXEC.BAT, is bypassed at startup and essential real mode drivers like HIMEM.SYS and SMARTDRV.EXE are embedded into IO.SYS. The registry is loaded only once; for efficient loading, the registry is split into three files instead of two (SYSTEM.DAT and USER.DAT), with the new file CLASSES.DAT containing the contents of the hive HKEY_CLASSES_ROOT required for boot loaded initially. Plug and Play device enumeration is more parallelized than in Windows 98. Boot time is not affected due to unavailability of a DHCP server or other network components. There are also optimizations to prevent boot slowdown due to BIOS POST operations.

USB Human Interface Device Class: Generic support for 5-button mice is also included as standard and installing IntelliPoint allows reassigning the programmable buttons.

Windows Image Acquisition: Windows Me introduced the Windows Image Acquisition API for a standardized method of allowing Windows applications to transparently and more easily communicate with image acquisition devices, such as digital cameras and scanners. WIA intended to improve the configuration and the user interface for interacting with scanners and such devices, (which were previously supported by the TWAIN standard) and simplify writing device drivers for developers. WIA also includes support for USB still image capture device classes such as scanners and cameras through the Picture Transfer Protocol.

Improved power management and suspend/resume operations: The OEM version of Windows Me supports OS-controlled ACPI S4 sleep state (hibernation) and other power management features without manufacturer-supplied drivers.

USB and FireWire support improvements: Windows Me is the only operating system in the Windows 9x series that includes generic drivers for USB mass storage devices and USB printers. Support for FireWire SBP-2 scanners and storage devices is also improved.

The waveOut, DirectSound, and DirectShow APIs support non-PCM formats such as AC-3 or WMA over S/PDIF.

• Windows Movie Maker: This utility is based on DirectShow and Windows Media technologies to provide Microsoft Windows computer systems with basic video capture and edit capabilities. It provides users with the ability to capture, edit, and re-encode media content into the Windows Media format, a tightly compressed format that requires a minimal amount of storage space on the computer's hard disk when compared to many other media formats.
• Windows Media Player 7: The new version of the Windows multimedia player software introduces jukebox functionality featuring the Media Library, support for CD burning, an integrated media encoder, and the ability to transfer music directly to portable devices. Another new feature is its radio tuner that can be used to search for and connect to radio stations over the internet. Users can also customize the look and feel of the user interface through interactive skins. Windows Me can be upgraded to Windows Media Player 9 Series, which was later included in Windows XP SP2.
• Windows DVD Player: The software DVD player in Windows Me is a redesigned version of the one featured in Windows 98 which, unlike its predecessor, does not require a dedicated decoder card for DVD playback. Instead, it supports software decoding through a third-party decoder.

• Net Crawler: Windows Me introduced a net crawling feature which automatically searches out and creates shortcuts to network shares and printers in My Network Places. This can be controlled using the Automatically search for network folders and printers option. Shortcuts that are added by the net crawler but not detected again on the network in a reasonable time period are aged out and deleted.
• New TCP/IP Stack: Windows Me includes the Windows 2000 networking stack and architecture.
• The Home Networking Wizard is designed to help users to set up a computer that is running Windows Me for use on a small home network. This includes setting up Internet Connection Sharing (ICS) on a computer running Windows Me so the computer can share a connection to the Internet with other computers on the home network.
• Dial-up Networking component was updated in Windows Me and provides several enhancements while maintaining the desired features of prior releases of the operating system. The user interface had been reworked to provide all configurable parameters in one convenient location. The user interface now included three new tabs: Networking, Security and Dialing. To improve dial-up networking, Windows Me includes built-in support for the Connection Manager dial-up client. Using the Connection Manager Administration Kit (an optional networking component in Windows 2000 Server), network administrators can pre-configure and deploy dial-up networking connections, by means of a Connection Manager service profile, to Windows Me–based client machines.
• Network Driver Interface Specification (NDIS) version 5.0 for Windows Me was enhanced to provide programming interface parity with NDIS version 5.0 in Windows 2000 (the programming interfaces used by network device drivers are the same for both platforms).
• Universal Plug and Play: Windows Me introduced support for Universal Plug and Play (UPnP). Universal Plug and Play and NAT traversal APIs can also be installed on Windows 98 and Windows 98 SE by installing the Windows XP Network Setup Wizard.

• System Restore: Windows Me introduced the "System Restore" logging and reversion system, which was meant to simplify troubleshooting and solve problems. It was intended to work as a rollback and recovery feature so that if the installation of an application or a driver adversely affected the system, the user could undo the installation and return the system to a previously working state. It does this by monitoring changes to Windows system files and the registry. System Restore protects only the operating system files, not documents, and therefore is not a substitute for a backup program.
• System File Protection: First introduced with Windows 2000 (as Windows File Protection), and expanding on the capabilities introduced with System File Checker in Windows 98, System File Protection aimed to protect system files from modification and corruption silently and automatically. When the file protection is in effect, replacing or deleting a system file causes Windows Me to silently restore the original copy. The original is taken from a hard drive backup folder (%WinDir%\Options\Install) or from the Windows Me installation CD, if the cached copy of files on the hard disk has been deleted. If no installation CD is in the drive, a dialog box alerts the user about the problem and requests that the CD be inserted. System File Protection is a different technology from System Restore and should not be confused with the latter. System Restore maintains a broad set of changed files including added applications and user configuration data stored repeatedly at specific points in time restored by the user, whereas System File Protection protects operating system files with no user input.
• System Configuration Utility allows users to manually extract and restore individual system files from the Windows Me setup files. It has also been updated with three new tabs called "Static VxDs", "Environment" and "International". The Static VxDs tab allows users to enable or disable static virtual device drivers to be loaded at startup, the Environment tab allows users to enable or disable environment variables, and the International tab allows users to set international language keyboard layout settings that were formerly set via the real mode MS-DOS configuration files. A Cleanup button on the Startup tab allows cleaning up invalid or deleted startup entries.
• System Monitor has been updated with a Dial-Up Adapter section. Users can now monitor items such as Connection Speeds, Bytes Received or Transmitted / Second.
• SCANDISK runs from within Windows upon an improper shutdown before the Windows Shell loads.
• Automatic Updates: The Automatic Updates utility automatically downloads and installs critical updates from the Windows Update Web site with little user interaction. It is set up to check Windows Update once every 24 hours by default. Users can choose to download which update they want, although high-priority updates must be downloaded and installed.
• Compressed Folders: Windows Me includes native support for ZIP files through the 'Compressed Folders' Explorer extension. This extension was originally introduced in the Plus! 98 collection for Windows 98, but is included in the base operating system in Windows Me.
• A new Help and Support program has also been added, replacing the HTML Help-based documentation in Windows 2000 and Windows 98. The Help and Support Center is entirely HTML-based and takes advantage of a technology called Support Automation Framework (SAF), that can show support information from the internet, allows collecting data for troubleshooting via WMI and scripting and for third parties to plug into Windows Help and Support. Several other support tools also shipped with Windows Me.
• Windows Me also includes Internet Explorer 5.5, which supports a new Print Preview feature. It also shipped with the MSN Messenger Service.

• On-Screen Keyboard: Originally introduced with Windows 2000, On-Screen Keyboard makes it possible to input characters using the mouse instead of the keyboard.
• The Mouse Control Panel incorporates IntelliPoint features, namely ClickLock (selecting or dragging without continuously holding down the mouse button), hiding the pointer while typing, and showing it by pressing Ctrl.
• The cursor (system caret) can be set to a thicker width.
• Increased Active Accessibility support in utilities such as Calculator and Magnifier.

Windows Me restricted support for real mode MS-DOS. As a result, IO.SYS in Windows Me disregards CONFIG.SYS, COMMAND.COM and WIN.COM and directly executes VMM32.VXD. In its default configuration the system would neither boot into an MS-DOS command prompt nor exit to DOS from Windows; real mode drivers such as ANSI.SYS could not be loaded and older applications that require real mode could not be run. Microsoft argued that the change improved the speed and reliability of the boot process.

In Windows Me, the CONFIG.SYS and AUTOEXEC.BAT files are used only to set global environment variables. The two files (if present) are scanned for settings relating to the environment variables, and any other commands present are moved into a Windows registry key (see below). The two files thus contain only settings and preferences which configure the "global environment" for the computer during the boot phase or when starting a new virtual DOS machine (VDM).

To specify or edit other startup values (which, in Windows 98, would be present in the AUTOEXEC.BAT file) the user must edit the following Windows registry key:

For troubleshooting and crash recovery, both the Windows Me CD-ROM and the Windows Me startup disk (a user-creatable floppy disk, known as the Emergency Boot Disk (EBD)) allowed booting into real mode MS-DOS.

It is possible to restore real mode DOS functionality through various unofficial means. Additionally, a registry setting exists that re-enables the "Restart in MS-DOS mode" option in the shutdown dialog box; however, unless patched unofficially with third-party software, Windows Me cannot be booted to MS-DOS real mode.

Unlike previous versions of Windows 9x, Windows Me was entirely aimed at home users, and thus had certain enterprise-oriented features removed. Several features of its predecessors did not work or were officially unsupported by Microsoft on Windows Me, including Automated Installation, Active Directory client services, System Policy Editor, Personal Web Server and ASP. These features were supported on the previous versions of Windows 9x. A Resource Kit publication, targeted towards system administrators, was never published for Windows Me.

Other features that were removed or never updated to work with Windows Me included Microsoft Fax, QuickView and DriveSpace, as well as the GUI FAT32 conversion tool. Several Windows Explorer commands were also modified in Windows Me, matching the menu structure in Windows 2000. While some were simply moved to a different location, certain functionality of the Go menu, as well as the Find command on the Tools menu, are no longer available. For the latter change Microsoft recommends using a variety of similar functionality labeled Search.

The Active Channels Channel bar from the original release of Windows 98 was removed like with Windows 98 Second Edition and is not installed upon first boot, but is retained if upgrading from the original release of Windows 98 to Windows 98 Second Edition or Windows Me.

Windows Me, like Windows 98 Second Edition, did not ship with the WinG API or RealPlayer 4.0, unlike the original release of Windows 98, due to both of these having been superseded by DirectX and Windows Media Player, respectively.