Recreational enthusiasts and athletes often are advised to abstain from consuming caffeinated beverages (CB). The dual purposes of this review are to (a) critique controlled investigations regarding the effects of caffeine on dehydration and exercise performance, and (b) ascertain whether abstaining from CB is scientifically and physiologically justifiable. The literature indicates that caffeine consumption stimulates a mild diuresis similar to water, but there is no evidence of a fluid-electrolyte imbalance that is detrimental to exercise performance or health. Investigations comparing caffeine (100-680 mg) to water or placebo seldom found a statistical difference in urine volume. In the 10 studies reviewed, consumption of a CB resulted in 0-84% retention of the initial volume ingested, whereas consumption of water resulted in 0-81% retention. Further, tolerance to caffeine reduces the likelihood that a detrimental fluid-electrolyte imbalance will occur. The scientific literature suggests that athletes and recreational enthusiasts will not incur detrimental fluid-electrolyte imbalances if they consume CB in moderation and eat a typical U.S. diet. Sedentary members of the general public should be a less risk than athletes because their fluid losses via sweating are smaller.