Caffeine is a substance that has been used in our society for generations, primarily for its effects on the central nervous system that causes wakefulness. Caffeine supplementation has become increasingly more popular as an ergogenic aid for athletes and considerable scientific evidence supports its effectiveness. Because of their potential to alter energy metabolism, the effects of coffee and caffeine on glucose metabolism in diabetes have also been studied both epidemiologically and experimentally. Predominantly targeting the adenosine receptors, caffeine causes alterations in glucose homeostasis by decreasing glucose uptake into skeletal muscle, thereby causing elevations in blood glucose concentration. Caffeine intake has also been proposed to increase symptomatic warning signs of hypoglycemia in patients with type 1 diabetes and elevate blood glucose levels in patients with type 2 diabetes. Other effects include potential increases in glucose counterregulatory hormones such as epinephrine, which can also decrease peripheral glucose disposal. Despite these established physiological effects, increased coffee intake has been associated with reduced risk of developing type 2 diabetes in large-scale epidemiological studies. This review paper highlights the known effects of caffeine on glucose homeostasis and diabetes metabolism during rest and exercise.