Psychedelic drugs produce profound changes in consciousness, but the underlying neurobiological mechanisms for this remain unclear. Spontaneous and induced oscillatory activity was recorded in healthy human participants with magnetoencephalography after intravenous infusion of psilocybin--prodrug of the nonselective serotonin 2A receptor agonist and classic psychedelic psilocin. Psilocybin reduced spontaneous cortical oscillatory power from 1 to 50 Hz in posterior association cortices, and from 8 to 100 Hz in frontal association cortices. Large decreases in oscillatory power were seen in areas of the default-mode network. Independent component analysis was used to identify a number of resting-state networks, and activity in these was similarly decreased after psilocybin. Psilocybin had no effect on low-level visually induced and motor-induced gamma-band oscillations, suggesting that some basic elements of oscillatory brain activity are relatively preserved during the psychedelic experience. Dynamic causal modeling revealed that posterior cingulate cortex desynchronization can be explained by increased excitability of deep-layer pyramidal neurons, which are known to be rich in 5-HT2A receptors. These findings suggest that the subjective effects of psychedelics result from a desynchronization of ongoing oscillatory rhythms in the cortex, likely triggered by 5-HT2A receptor-mediated excitation of deep pyramidal cells.