Caffeine (1,3,7-trimethylxanthine) is a biotransformation product of theophylline (1,3-dimethylxanthine) in the human fetus. Liver explants, obtained from human fetuses with gestational ages of 12 to 20 weeks, were incubated with theophylline and produced caffeine and, in lesser amounts, 1,3-dimethyluric acid and 3-methylxanthine. These findings suggest that the predominant pathway in theophylline metabolism in the fetus and newborn infant is the methylation reaction producing caffeine. This may contribute to the neonate's exceedingly slower elimination of caffeine relative to theophylline. Caffeine produced from theophylline may add to the pharmacologic effects of theophylline in newborn infants with apnea.