The physico-chemical properties relevant to the equilibrium partitioning (bioconcentration) of chemicals between organisms and their respired media of water and air are reviewed and illustrated for chemicals that range in hydrophobicity. Relationships are then explored between freely dissolved external concentrations such as LC50s and chemical properties for one important toxicity mechanism, namely baseline toxicity or narcosis. The 'activity hypothesis' proposed by Ferguson in 1939 provides a coherent and compelling explanation for baseline toxicity of chemicals in both water- and air-respiring organisms, as well as a reference point for identifying more specific toxicity pathways. From inhalation studies with fish and rodents, narcosis is shown to occur at a chemical activity exceeding approximately 0.01 and there is no evidence of narcosis at activities less than 0.001. The activity hypothesis provides a framework for directly comparing the toxic potency of chemicals in both air- and water-breathing animals. The activity hypothesis is shown to be consistent with the critical body residue concept, but it has the advantage of avoiding the confounding effect of lipid content of the test organism. It also provides a theoretically sound basis for assessing the baseline toxicity of mixtures. It is suggested that since activity is readily calculated from fugacity, observed or predicted environmental abiotic and biotic fugacities can be used to evaluate the potential for baseline toxicity. Further, models employing fugacity or activity can be used to improve the experimental design of bioassays, thus possibly reducing unnecessary animal testing.