How caffeine acts as a diuretic?

The short answer is "no, not if you're used to it." It is a common misconception that coffee should be avoided as a fluid replacement under the belief that caffeine is a diuretic. The diuretic effect of caffeine was originally examined on acute studies in caffeine naïve individuals, see references i, ii, iii, iv, v, vi, vii. However research shows that a tolerance to caffeine develops, see references viii, ix, x, xi, xii. As such those who are not caffeine naïve, i.e. regularly ingest caffeine, do not experience an increased urine output or altered conditions of hydration status after consuming caffeinated beverages, see references xiii, xiv.

i. Ballet S, et al (1969) Effect of coffee ingestion on catecholamine release. Met 18; 288-291

ii. Dorfman LJ, Jarvik ME (1970) Comparative stimulant and diuretic actions of caffeine and theobromine in man. Clin Pharmacol Ther 11; 869-872

iii. Massey L, Wise K (1984) The effect of dietary caffeine on urinary excretion of calcium, magnesium, sodium and potassium in healthy young females. Nutr Res 4; 43-50

iv. Neuhäuser-Berthold M, et al (1997) Coffee consumption and total body water homeostasis as measured by fluid balance and bioelectrical impedance analysis. Ann Nutr Met 41; 29-36

v. Passmore AP, et al (1987) Renal and cardiovascular effects of caffeine: a dose-response study. Clin Sci (London) 72; 749-756

vi. Robertson D, et al (1978) Effects of caffeine on plasma rennin activity, catecholamines and blood pressure. NEJM 298; 181-186

vii. Wemple R, et al (1997) Caffeine vs caffeine-free sports drink: effects on urine production at rest and during prolonged exercise. Int J Sports Med 18; 40-46

viii. Colton T, et al (1968) The tolerance of coffee drinkers to caffeine. Clin Pharmacol Ther 9; 31-39

ix. Denaro C, et al (1991) Effects of caffeine with repeated dosing. Eur J Clin Pharmacol 40; 273-278

x. Goldstein A, et al (1969) Psychotropic effects of caffeine in man. IV. Quantitative and qualitative differences associated with habituation to coffee. Clin Pharmacol Ther 10; 489-497

xi. Myers M, Reeves R (1991) The effect of caffeine on daytime ambulatory blood pressure. Am J Hypertens 4; 427-431

xii. Robertson D, et al (1981) Tolerance to the humoral and hemodynamic effects of caffeine in man. J Clin Invest 67; 1111-1117

xiii. Grandjean AC, et al (2000) The effect of caffeinated, non caffeinated, caloric and non-caloric beverages on hydration. JACN 19; 591-600

xiv. Armstrong LE (2002) Caffeine, body fluid-electrolyte balance, and exercise performance. Int J Sport Nutr and Exer Met 12; 189-206