Coffee is one of the most widely consumed beverages worldwide, primarily due to the stimulating effects attributed to its caffeine content. However, excessive intake of caffeine results in negative effects, including palpitations, anxiety, and insomnia. Therefore, low-caffeine coffee has captivated growing consumer interest, highlighting its significant market potential. Traditional decaffeination methods often lead to non-selective extraction, resulting in a loss of desirable flavor compounds, thereby compromising coffee quality. In recent years, microbial fermentation has emerged as a promising, targeted, and safe approach for reducing caffeine content during processing. Additionally, mixed-culture fermentation further enhances coffee flavor and overcomes the drawbacks of monoculture fermentation, such as low efficiency and limited flavor profiles. Nonetheless, several challenges are yet to be resolved, including microbial tolerance to caffeine and related alkaloids, the safety of fermentation products, and elucidation of the underlying mechanisms behind microbial synergy in co-cultures. This review outlines the variety of microorganisms with the potential to degrade caffeine and the biochemical processes involved in this process. It explores how microbes tolerate caffeine, the safety of metabolites produced during fermentation, and the synergistic effects of mixed microbial cultures on the modulation of coffee flavor compounds, including esters and carbonyls. Future directions are discussed, including the screening of alkaloid-tolerant strains, constructing microbial consortia for simultaneous caffeine degradation for flavor enhancement, and developing high-quality low-caffeine coffee.