Methylxanthines, including caffeine and theophylline, are a class of natural and synthetic compounds with important roles in food, cosmetics, and medicine. These compounds are metabolized by bacteria using five enzymes from the Rieske non-heme iron oxygenase family, NdmABCDE. The NdmCDE complex is responsible for the N7-demethylation of 7-methylxanthine to xanthine and was originally described as being highly specific for 7-methylxanthine. Here, we report that the NdmCDE complex is also active toward theobromine, producing 3-methylxanthine due to N7-demethylation. Minimal activity was observed when the enzyme complex was tested with caffeine or paraxanthine, indicating that the presence of the N1-methyl group significantly inhibits N7-demethylase activity by NdmCDE. We also demonstrated positional promiscuity in the N3-demethylase, NdmB, which is able to carry out N1-demethylation of paraxanthine. The N1-demethylation by NdmB is limited to paraxanthine and was not observed when caffeine or theophylline were assayed. These newly discovered activities were observed when enzymes were overexpressed in E. coli and differ from results with purified enzymes assayed in vitro, indicating that they may behave differently in vivo. Furthermore, these results reveal promiscuity of bacterial N-demethylase enzymes that can be used to engineer new enzymes and bacterial strains for production of high-value methylxanthines.