Caffeine has been consumed since ancient times due to its beneficial effects on attention, psychomotor function, and memory. Caffeine exerts its action mainly through an antagonism of cerebral adenosine receptors, although there are important secondary effects on other neurotransmitter systems. Recently, functional MRI (fMRI) entered the field of neuropharmacology to explore the intracerebral sites and mechanisms of action of pharmacological agents. However, as caffeine possesses vasoconstrictive properties it may interfere with the mechanisms underlying the functional contrast in fMRI. Yet, only a limited number of studies dealt with the effect of caffeine on measures in fMRI. Even fewer neuroimaging studies examined the effects that caffeine exerts on cognition: Portas and colleagues used fMRI in an attentional task under different levels of arousal (sleep deprivation or caffeine administration), concluding that the thalamus is involved in mediating the interaction of attention and arousal. Bendlin and colleagues found caffeine to stabilize the extent of neuronal activation in repetitive word stem completion, counteracting the general task practice effect. Recently, Koppelstaetter and colleagues assessed the effect of caffeine on verbal working memory demonstrating a modulatory effect of caffeine on brain regions (medial frontopolar and anterior cingulate cortex) that have been associated with attentional and executive functions. This review surveys and discusses neuroimaging findings on 1) how caffeine affects the contrast underlying fMRI techniques, particularly the blood oxygen level dependent contrast (BOLD fMRI), and 2) how caffeine operates on neuronal activity underlying cognition, to understand the effect of caffeine on behavior and its neurobiological underpinnings.