Background: The modulation of N-methyl-D-aspartate receptors is associated with a molar water solubility cut-off effect of approximately 1.1 mmol/l and hence are unaffected by significantly less soluble compounds. However, compounds with this molar water solubility are still able to modulate γ-aminobutyric acid type A (GABAA) receptors. We hypothesized that GABAA receptor modulation by phenolic compounds would exhibit cut-off at a molar water solubility value less than 1.1 mmol/l. Methods: GABAA receptors consisting of human α1 and rat β2 and γ2s subunits were expressed in Xenopus laevis oocytes, and drug responses were measured using standard 2-electrode voltage clamp techniques. Twenty substituted phenols and benzenes of similar size and molecular volume were studied at saturated aqueous concentrations. Reversible and statistically significant change in GABAA receptor current that was 10% or greater in magnitude from the baseline response defined a positive drug effect. Results: All phenyl ring compounds with a molar water solubility value equal to or greater than 0.46 mmol/l positively modulated GABAA receptor currents. No compounds with a molar water solubility value equal to or less than 0.10 mmol/l had any effect on GABAA receptor currents. Saturated solutions of phenols with 2,6-dimethyl and 2,6-diisopropyl substituents also caused channel opening in the absence of GABA. Conclusions: The molar water solubility cut-off for GABAA receptor modulation by phenyl ring compounds lies between 0.10 and 0.46 mmol/l. Data suggest that hydrocarbons, perhaps including inhaled anesthetics, might modulate GABAA receptors by displacing water from one or more low-affinity amphipathic binding sites to induce conformational changes that increase ion conductance.