A toy water gun having a water supply tank which can be filled with water, and a water pump located on the housing for pumping water from the supply tank to at least one water pressure chamber. The water pressure chamber includes a fixed wall, and a moveable wall which substantially sealingly engages the fixed wall and is slidable away from a first end wall as water is pumped into the water pressure chamber and toward it as water is discharged. An air pressure chamber is located on an opposite side of the moveable wall from the water pressure chamber and is pressurizable with compressed air to bias the moveable wall toward the first end wall. A pump is connected to a selector valve assembly which, in a first state, allows air to be pumped into the air pressure chamber for pressurizing it with compressed air and, in a second state, places the pump in communication between the water supply tank and the water pressure chamber to allow water to be pumped from the supply tank to the water pressure chamber. Upon actuation of a release valve, the air pressure acts on the moveable wall to force water under pressure from the water pressure chamber so that a stream of water is ejected.