Summary Caffeine is the most popular drug in the world. After consumption, it is rapidly distributed throughout the body where it acts by blocking the action of endogenous adenosine at adenosine A1 and A2a receptors, resulting in a variety of physiological effects. Although it is valued as a useful psychostimulant, recent evidence suggests that actually little or no acute benefit is gained from regular caffeine consumption. This is because withdrawal of caffeine (e.g. overnight) lowers alertness and mood and degrades performance, and while consumption of some more caffeine reverses these effects, it does not boost functioning to above ‘normal’ levels. It also tends to increase anxiety, particularly in susceptible individuals. In contrast, caffeine consumption may separately lower the risk of cognitive decline in older age, perhaps owing to effects involving neuroprotective functions of the adenosine system. Currently, however, not enough is known to do a full risk assessment on these or other potential health effects of dietary caffeine.