We analyze rotation velocities and chromospheric (H?) activity, derived from high-resolution spectra, in a large sample of mid-M to L field dwarfs. The projected rotation velocity is found to increase from mid-M to L. This is consistent with a lengthening of spin-down timescale with later type, although in the L types the trend may also be a function of the observational bias toward younger objects. From M4 to M8.5 a saturation-type rotation-activity relation is seen, similar to that in earlier types, when activity is measured through either FH? or LH?/Lbol. However, we find that activity saturates at a significantly higher velocity (~10 km s-1) in the M5.5-M8.5 dwarfs than in the M4-M5 ones (4 km s-1). This may result from a change in the dynamo behavior with later type (see also below). We note that the saturation level in H? emission appears to vary somewhat less with spectral type (from M4 to M8.5) when activity is measured through LH?/Lbol instead of FH?. In M9 and later dwarfs, we observe a drastic drop in activity and a sharp break in the rotation-activity connection: H? emission levels in these dwarfs are much lower than in earlier types, and often undetectable, in spite of very rapid rotation. This may be caused by the very high resistivities in the predominantly neutral atmospheres of these dwarfs, which would damp the magnetic energy available for supporting a chromosphere. It is also possible that the rapid formation of dust in these cool atmospheres exacerbates this effect, as charged particles are soaked up by (more massive) dust grains. Finally, we note that spectral type determination from low-resolution spectra may be affected by gravity effects: cooler, lower gravity objects may mimic hotter, higher gravity ones. Therefore, it is possible that the few unsaturated fast rotators from M5.5 to M8.5 (whose presence leads us to ascribe a higher saturation velocity to these spectral types, as noted above) may actually be very low mass objects, with lower Teff (and gravity) than their spectral types suggest. If so, their behavior (low activity, fast rotation) would be compatible with that of the cool M9 and later dwarfs (and no change in dynamo behavior would have to be postulated in the M5.5-M8.5 dwarfs). This interpretation is supported by a preliminary analysis of the high-resolution spectra of these anomolous objects. It is also bolstered by the fact that a saturation-type Rossby number-activity relation is seen in the M5.5-M8.5 dwarfs when these anomalous objects are removed from the sample, while the relationship is much weaker when they are included.