Five yeast species isolated from caffeine contaminated samples were screened for their capability of caffeine degradation. Based on the degradation efficiency, isolate was selected and identified as Trichosporon asahii which showed 60 {\%} degradation of caffeine in 72 hours when caffeine was utilized as the sole carbon and nitrogen source. The influence of various factors such as pH, temperature, shaking speed, inoculum size, carbon source, nitrogen source and initial caffeine concentration on caffeine degradation were studied. The optimum growth conditions for caffeine degradation by T. asahii were found to be pH 6.5, temperature 28 °C, shaking speed 120 rpm, inoculum size 4 {\%} (w/v) with initial caffeine concentration 2 gm/l and 100 {\%} degradation was achieved within 96 hours in the presence of sucrose (5 gm/l). The addition of external nitrogen sources viz. sodium nitrite and sodium nitrate decreased the caffeine degradation to 25 {\%} and 30 {\%} respectively. This is the first report on caffeine degradation using yeast cells.