This review examines how psilocybin, the active compound in certain mushrooms, may help treat depression and anxiety by reducing brain inflammation and promoting healthy neurotransmitter function. Both full doses under medical supervision and smaller ‘microdoses’ show promise for mental health conditions. The research suggests psilocybin works by calming the immune system’s inflammatory response while simultaneously supporting the brain’s natural healing and adaptation processes, offering a potential alternative treatment when standard medications don’t work.