The hollow-shaped species abundance distribution (SAD) and its allied rank abundance distribution (RAD)—showing that abundance is unevenly distributed among species—are some of the most studied patterns in ecology. To explain the nature of abundance inequality, I developed a novel framework identifying environmental favorability, which controls the balance between reproduction and immigration, as the ultimate source and species stress tolerance as a proximate factor. Thus, under harsh conditions, only a few tolerant species can reproduce, while some sensitive species can be present in low numbers due to chance immigration. This would lead to high abundance inequality between the two groups of species. Under benign conditions, both groups can reproduce and give rise to higher abundance equality. To test these ideas, I examined the variability in the parameters of a Poisson lognormal fit of the SAD and a square root fit of the RAD in diatom and fish communities across US streams. Indeed, as environmental favorability increased, more sensitive forms were able to establish large populations, diminishing the abundance disparity between locally common and rare species. Finally, it was demonstrated that in diatoms, the RAD belonged to the same family of relationships as those of population density with body size and regional distribution.