Caffeine at concentrations of 8 mM or higher inhibited cell propagation and killed a fraction of the population. Cell inactivation increased incrementally with increasing concentrations. The survivors developed tolerance by physiological adaptation that enabled them to propagate in the presence of the drug, but the tolerance could easily be lost if the cells grew in the absence of caffeine for a few generations. Theophylline was found to diminish the toxic effect of caffeine. Possible mechanisms for the observed cellular response and its implications for studies of the effects of these drugs in eukaryotes are discussed.