TL;DR While caffeine is a mild diuretic (it makes you pee), it doesn't really lead to dehydration. So you can enjoy your usual caffeine fix and not worry a single thing about getting dehydrate!
One of the common questions about caffeine is whether it makes you dehydrated. Some think that coffee and other caffeinated beverages make them pee more than usual, perhaps making them believe that they’re losing fluids. Some though think that it doesn’t make a dent on their fluid intake.
If we were to turn these myths, urban legends, “feelings” and observations (however way you want to call it) into something scientific, then the million-dollar question is…
Before we flush out the truth, we need to know what diuretic actually means.
According to Healthline: 
“Diuretics help the body get rid of excess fluid, mainly water and sodium. Most stimulate the kidneys to excrete more sodium into the urine. When diuretics flush away sodium, the body also flushes away water.”
To put it simply, diuretics are substances that make you pee more.
While diuretics prompt your body to produce more urine, having more trips to the toilet doesn’t necessarily equate to dehydration. Well, unless of course you intentionally dehydrate by not drinking enough fluids!
So here’s the deal.
A study that goes way back to 1928 showed that caffeine doesn’t have anything to do with the amount of pee you do in a day.  More specifically, caffeinated beverages don’t affect urine output as much as any regular beverage.
However, recent studies now say that caffeine is a mild diuretic and can, in fact, affect fluid balance.
Medicinenet.com mentions research showing this: 
“In one study, 12 caffeine consumers were told to abstain from caffeine for five days and were then given 642 mg of caffeine in the form of coffee. Their urine output increased when given the caffeine. Another study done on eight men tested the effect of 45 mg, 90 mg, 180 mg, or 360 mg of caffeine on urine volume. An increase in urine volume was seen only at the 360 mg dose of caffeine. One limitation to these studies is that they did not evaluate the impact of caffeine when consumed on a regular basis. A onetime dose may affect the body differently than daily consumption.”
To understand how caffeine leads you to make more trips to the loo, here’s a video by ASAPScience:
Caffeine makes your kidneys clean up your system from extra sodium and water in a phenomenon more commonly known as peeing. But while we can consider it a diuretic, caffeine does NOT make you dehydrated.
At this point, it’s important to know that you peeing often and losing liquid doesn’t totally drain you out of fluid.
According to Dr. Daniel Vigil, an associate clinical professor of family medicine at the David Geffen School of Medicine at the University of California Los Angeles:
“When you drink a cup of coffee or you drink a glass of iced tea, you are necessarily taking in a volume of fluid along with that dose of [caffeine]. Even though caffeine is a mild diuretic, you won’t lose more fluid through urine than you take in by drinking a caffeinated beverage. Your body is able to absorb as much fluid as it needs and expel the rest."
This is actually supported by a study that concludes pretty much the same thing.
Consuming caffeinated beverages as part of a normal lifestyle does NOT lead to “fluid loss in excess of the volume ingested or is associated with poor hydration status.
So there's no need to “refrain from caffeine-containing drinks in situations where the fluid balance might be compromised.” 
The cool thing is, instead of dehydrating you, caffeine does the exact opposite! That first-morning cuppa you sluggishly make actually contributes to that glowing, misty look - all thanks to caffeine’s hydrating effects!
And that good 'ol "drink 8 glasses of water every day?” They should also include your cup of java, alongside other beverages that are least associated to hydration, i.e. skim milk and beer.
You can find a few more studies related to this in our previous article, “Does caffeine make you pee more?”
Making you pee more is just the tip of the iceberg. In the realm of diuresis, caffeine also does these things in your body: 
Higher Blood Volume for Renal System
Because caffeine is a stimulant, it leads to higher cardiovascular activity, faster heart beat and increased blood pressure. This makes the renal system work harder as it needs to filter a higher volume of blood. This makes the kidneys flush out more of these wastes, which is manifested in frequent urination. This whole thing may, unfortunately, lead to irregular heart rhythms and nutrient depletion, so it's important to limit your caffeine intake.
Hinders Resorption of Sodium and Water
According to Livestrong, "kidneys maintain homeostasis in the bloodstream by regulating the balance between sodium and water in order to ensure bodily cells are likewise balanced." Caffeine causes uptake of sodium and water from the kidneys into the bloodstream, causing the kidneys to either flush out water or sodium to keep the balance in the bloodstream and cells.
Relaxes Bladder Muscles
Caffeine helps ease and relax the detrusor muscles - or those that control the amount of fluid going from the bladder into the urethra - thereby causing the bladder to feel like it's getting filled up. Also, caffeine relaxes the bladder's capacity to hold a large volume of urine. Hence the need to pee more frequently.
While caffeinated drinks may be considered mild diuretics, or substances that may cause more frequent urination, they don't really cause dehydration. Drinking them as part of a normal lifestyle doesn't make a dent in fluid intake. They can, rather, add up as a part of your daily fluid requirement, alongside water (and other fluids that oddly hydrate such as skim milk and beer).
For more information, watch this video:
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