The effect of various initial caffeine concentrations on growth and caffeine demethylase production by Pseudomonas sp. was studied in bioreactor. At initial concentration of 6.5 g l-1 caffeine, Pseudomonas sp. showed a maximum specific growth rate of 0.2 h-1, maximum degradation rate of 1.1 g h-1, and caffeine demethylase activity of 18,762 U g CDW-1 (CDW: cell dry weight). Caffeine degradation rate was 25 times higher in bioreactor than in shake flask. For the first time, we show highest degradation of 75 g caffeine (initial concentration 20 g l-1) in 120 h, suggesting that the tested strain has potential for successful bioprocess for caffeine degradation. Growth kinetics showed substrate inhibition phenomenon. Various substrate inhibition models were fitted to the kinetic data, amongst which the double-exponential (R 2 = 0.94), Luong (R 2 = 0.92), and Yano and Koga 2 (R 2 = 0.94) models were found to be the best. The Luedeking-Piret model showed that caffeine demethylase production kinetics was growth related. This is the first report on production of high levels of caffeine demethylase in batch bioreactor with faster degradation rate and high tolerance to caffeine, hence clearly suggesting that Pseudomonas sp. used in this study is a potential biocatalyst for industrial decaffeination. © 2010 Society for Industrial Microbiology.