A breath-sensitive toy responding with interesting behavior to human breath such as caused by whispering, speaking, singing, or blowing. A processor monitors sensors for detecting humidity or temperature variations due to the proximity of human breath. When the presence of breath is detected, the processor actuates one or more output devices capable of producing sound, light, or movement. The toy can have the form of a figure such as a doll or stuffed toy, or the form of a child's musical toy, such as a pan flute or harmonica.