Despite being the most widely consumed psychoactive substance in the world, there is considerable confusion regarding the effects of caffeine. This study examined objective indices of performance, and self-reported mood, headache, and sleep in 36 healthy male and female habitual caffeine consumers exposed to a pattern of moderate intake. A double-blind placebo-controlled cross-over design with counterbalancing was employed in which all subjects participated in four experimental conditions involving the ingestion of placebo or caffeine 3 times daily for 6 days followed by a 7th (challenge) day of placebo or caffeine ingestion. No evidence was found that caffeine improved performance, either in the context of acute or habitual use. On the contrary, performance was found to be significantly impaired when caffeine was withdrawn abruptly following habitual use. Participants reported feeling more alert and less tired following acute ingestion of caffeine, but feeling less alert in conjunction with chronic exposure to the drug. In addition, caffeine withdrawal was associated with reported increases in frequency and severity of headache, and with reports of sleeping longer and more soundly.