A toy includes a main body which, in a first orientation, resembles a water gun and, in a second orientation, resembles a vehicle. Within the main body is an air/water reservoir which may be filled with water, the reservoir being in communication with a source of air pressured by a hand-pump to cause water to be forcibly expelled from the reservoir upon opening a valve at a water outlet of the reservoir. The water outlet is controlled by a trigger mechanism which, when the toy is in the first orientation, resembles the trigger of a gun and permits opening and closing ofthe valve to occur upon pulling and release of the trigger. In the second orientation, the trigger mechanism is latched upon pulling the trigger in order to permit continued expulsion of water upon release of the trigger so that the expulsion of water serves to propel the vehicle. The vehicle may be a water craft such as a submarine and include realistic appurtenances or accessories that may be manipulated to provide a more realistic appearance. In the case of a submarine, the appurtenances may include stabilizer fins pivotal into a horizontal orientation, and louvers that cause the vehicle to dive below the surface, the portion of the housing accommodating the trigger being arranged to resemble a conning tower of the submarine, and the air/water reservoir being positioned to cause the submarine to dive when full and to return to the surface as the reservoir empties. In addition, the toy may be provided with a circuit and speaker for providing sound effects in one or both orientations.