Caffeine is commonly consumed in an effort to enhance cognitive performance. However, little is known about the usefulness of caffeine with regard to memory enhancement, with previous studies showing inconsistent effects on memory performance. We aimed to determine the effect of caffeine on working memory (WM) load-related activation during encoding, maintenance and retrieval phases of a WM maintenance task using functional magnetic resonance imaging (fMRI). 20 healthy, male, habitual caffeine consumers aged 40-61 years were administered 100 mg of caffeine in a double-blind placebo-controlled crossover design. Participants were scanned in a non-withdrawn state following a workday during which caffeinated products were consumed according to individual normal use (range = 145-595 mg). Acute caffeine administration was associated with increased load-related activation compared to placebo in the left and right dorsolateral prefrontal cortex during WM encoding, but decreased load-related activation in the left thalamus during WM maintenance. These findings are indicative of an effect of caffeine on the fronto-parietal network involved in the top-down cognitive control of WM processes during encoding and an effect on the prefrontal cortico-thalamic loop involved in the interaction between arousal and the top-down control of attention during maintenance. Therefore, the effects of caffeine on WM may be attributed to both a direct effect of caffeine on WM processes, as well as an indirect effect on WM via arousal modulation. Behavioural and fMRI results were more consistent with a detrimental effect of caffeine on WM at higher levels of WM load, than caffeine-related WM enhancement. This article is part of a Special Issue entitled 'Cognitive Enhancers'. © 2012 Elsevier Ltd. All rights reserved.