The genus Psilocybe contains iconic species of fungi renowned for their hallucinogenic properties. Recently, Psilocybe also included non-hallucinogenic species that have since been shifted to the genus Deconica. Here, we reconstruct a multigene phylogeny for Psilocybe, Deconica, and other exemplars of the families Hymenogastraceae and Strophariaceae sensu stricto (s. str.), using three nuclear markers (nLSU-rRNA, 5.8S rRNA, and rpb1). Our results confirm the monophyly of Deconica within Strophariaceae s. str., as well as numerous robust infrageneric relationships. Psilocybe is also recovered as a monophyletic group in the Hymenogastraceae, in which two principal lineages are recognized, including several nested subgroups. Most sections of Psilocybe following classifications based on morphological features are not supported in these analyses. Ancestral character state reconstruction analyses suggest that basidiospore shape in frontal view and spore wall thickness, commonly used to characterize sections in Deconica and Psilocybe, are homoplastic. Chrysocystidia, sterile cells located in the hymenium, evolved on at least two occasions in the Strophariaceae s. str., including in a novel lineage of Deconica.