To distinguish the toxicity of whole oil droplets from compounds dissolved in water, responses of zebrafish embryos exposed to particulate-laden, mechanically dispersed Alaska North Slope crude oil (mechanically dispersed oil (MDO)) were compared to those of embryos protected from direct oil droplet contact by an agarose matrix. Most polycyclic aromatic hydrocarbons (PAHs) in MDO were contained in oil droplets; about 16% were dissolved. The agarose precluded embryo contact with particulate oil but allowed diffusive passage of dissolved PAHs. The incidence of edema, hemorrhaging, and cardiac abnormalities in embryos was dose-dependent in both MDO and agarose and the biological effects in these compartments were identical in character. Although mean total PAH (TPAH) concentrations in MDO were about 5-9 times greater than in agarose, dissolved PAH concentrations were similar in the two compartments. Furthermore, mean differences in paired embryo responses between compartments were relatively small (14-23%, grand mean 17%), typically with a larger response in embryos exposed to MDO. Therefore, the embryos reacted only to dissolved PAHs and the response difference between compartments is explained by diffusion. Averaged over 48 h, the estimated mean TPAH concentration in agarose was about 16% less than the dissolved TPAH concentration in MDO. Thus, PAHs dissolved from oil are toxic and physical contact with oil droplets is not necessary for embryotoxicity.