•Caffeine at 0.05mM decreases oxidative stress in hyperoxia.•Caffeine at 1mM decreases cell viability, increases oxidative stress in hyperoxia.•Caffeine at 1 but not 0.05mM, abrogates hyperoxia-induced G2/M arrest. Caffeine is used to prevent bronchopulmonary dysplasia (BPD) in premature neonates. Hyperoxia contributes to the development of BPD, inhibits cell proliferation and decreases cell survival. The mechanisms responsible for the protective effect of caffeine in pulmonary oxygen toxicity remain largely unknown. A549 and MLE 12 pulmonary epithelial cells were exposed to hyperoxia or maintained in room air, in the presence of different concentrations (0, 0.05, 0.1 and 1mM) of caffeine. Caffeine had a differential concentration-specific effect on cell cycle progression, oxidative stress and viability, with 1mM concentration being deleterious and 0.05mM being protective. Reactive oxygen species (ROS) generation during hyperoxia was modulated by caffeine in a similar concentration-specific manner. Caffeine at 1mM, but not at the 0.05mM concentration decreased the G2 arrest in these cells. Taken together this study shows the novel funding that caffeine has a concentration-specific effect on cell cycle regulation, ROS generation, and cell survival in hyperoxic conditions.