US artist Gary Baseman in Hong Kong for Toby celebration show

A giant inflatable fez-wearing character sways awkwardly outside Times Square Living Room Museum, an afternoon downpour failing to dampen its party spirit. This is Toby, the most popular character from the wild imagination of US artist Gary Baseman, who is in Hong Kong to pay homage to his alter ego with the "Happy Toby to You" exhibition until June 11.

But what Baseman has created at the museum's space is more religion than art - walking into the high-ceilinged gallery is like entering the Church of Toby, his face peering at the viewer from every angle. You may expect a piano in the corner to play Toby tunes and Toby-shaped candles flickering in the corner. Baseman has gone all out to celebrate the 10th anniversary of his best friend.

It's a couple of days before the show's opening and Baseman is making some final touches. He strides forward wearing a big smile and a small straw hat, wisps of silver hair waving out the side matching his almost-perfect triangular goatee. He hands over a toy. "Meet Toby."

It's hard not to take an instant liking to Baseman: he's funny and self-deprecating - "I tend to put both feet in my mouth" - and full of contradictions, much like his art which, at first glance, looks innocent enough. You'll first notice pastel-coloured fairy tale-like drawings with forest creatures frolicking in the woods, but look closer and it's a different story - there are creatures with missing body parts, blood dripping from a wolf's mouth, skeletons, ghosts and naked women entangled in weird sexual positions, some with rabbits and some oozing pink gunk from their bellies. It's like taking an acid trip and wandering on the set of Alice in Wonderland after having not slept for three days.

It's Baseman's ability to mix the creepy with the cuddly that has allowed him to appeal to both adults and children. "I try to keep it childlike and adult. I don't really walk that fine line, I break the line. How to create something that's playful, but at same time I take life seriously," he says.

Baseman's work also aims to blur the line between fine art and toy culture - and it all comes with a strong social message. "Toby is based on my tomboy friend growing up in LA. She was four years older and I loved her … What Toby taught me then, and what he means now, is all about acceptance - acceptance of yourself and acceptance of others. He's my alter ego, but the goal of Toby is to be the keeper of secrets, the secrets I could not even share with my closest friends or family … I thought they would judge me."