By Kate Devlin
Last Updated: 1:20PM GMT 13 Jan 2009
They warn that "high caffeine users", those who drink more than the equivalent of seven cups of instant coffee a day, are at the increased risk.
But because of the extra caffeine content in brewed coffee only half as many cups are needed to create the same effect.
Even moderate amounts of the stimulant can lead people to hear voices and see things that are not there, the researchers warn.
Previous studies have shown that too much caffeine can lead to heart palpitations, insomnia and even affect a woman's chances of becoming pregnant.
Simon Jones, from Durham University, who led the study, said: "Some people have hallucinations which they find frightening, others say they often hear voices and it does not appear to affect their everyday lives.
"What our study has shown is a clear link between these hallucinations and a high caffeine intake."