Caffeine is one of the most widely consumed drugs in the world, taken socially and for its alertness- and performance-promoting actions. Extensive reports assert that caffeine increases alertness and cognitive performance levels and, when taken before exercise, demonstrates ergogenic properties. Caffeine ingestion has been associated with increased performance during endurance submaximal, and acute, high-intensity exercise. The exact mechanism of action for the performance effects of caffeine is unknown, although several physiologically and psychologically based theories exist as to how caffeine achieves increased performance capabilities. This paper outlines the known sites of caffeine activity in the body,and discusses these with respect to the effects of caffeine observed during performance assessments.