This study concerned the effects of caffeine alkaloid on cognitive performance. It was indicated from previous experimentation with this drug that caffeine reduces drowsiness and increases alertness. Caffeine at a dosage level of 150 to 300 mg. is reported to offset fatigue-induced performance decrement in both physical and mental tasks and slows the development of boredom. It was hypothesized that 300 mg. of caffeine, administered in the form of a capsule, will enhance performance on the Paced Sequential Memory Task developed by Lloyd, et al. (1960). Ss were 60 volunteer Howard University students taking undergraduate courses in psychology. They were randomly assigned to four treatment groups: (1) drug, (2) drug disguised, (3) placebo, and (4) no drug. Ss were instructed on the nature of the task, then tested individually. The original data analysis showed no statistically reliable effects, despite a considerable spread of treatment means. Due to extremely high withingroups variance, the data were re-analyzed with outliers removed according to Grubbs' (1950) criterion. A significant interaction was found between presence of drug and presence of pill, suggestive of an “active placebo” effect in the direction of performance enhancement It is noteworthy that such an effect would be misinterpreted in the conventional drug vs placebo model.