We propose and demonstrate hydrophobic photonic crystal fibers (PCFs). A chemical surface treatment for making PCFs hydrophobic is introduced. This repels water from the holes of PCFs, so that their optical properties remain unchanged even when they are immersed in water. The combination of a hollow core and a water-repellent inner surface of the hydrophobic PCF provides an ultracompact dissolved-gas sensor element, which is demonstrated for the sensing of dissolved ammonia gas.