A bacterial strain capable of utilizing caffeine as the sole source of carbon and nitrogen has been isolated from soil of coffee plantation area and deposited at National Collection of Industrial Microorganisms as Pseudomonas sp. based on biochemical studies. In this study, the isolate showed close resemblance to Pseudomonas putida strain T-57 based on 16S rRNA analysis. The ability of Pseudomonas sp. to degrade caffeine was studied by growing the isolate in caffeine medium with 1.2, 5, 7.5 and 10 g L -1 of initial concentration of caffeine. It was observed that the isolate could efficiently degrade caffeine at an initial concentration of 5 g L -1 within 48 h. It could also bring about 59.9 and 21.5% degradation of caffeine in 96 h when the initial concentration of caffeine in the medium was 7.5 and 10 g L -1, respectively. Analysis of the metabolites formed during the course of time showed that degradation followed a demethylation pathway with 3, 7-dimethylxanthine as the first major product of degradation. Furthermore, a 12 kb plasmid was isolated and the involvement of this plasmid in caffeine degradation was indicated by growth of transformed E. eoli DH5a strain. This strain can therefore prove to be a very good candidate for the biotreatment of residues of coffee and tea processing plants and also a potential strain for the development of improved methods of decaffeination. © 2010 Academic Journals Inc.