Researchers at Imperial College London have been exploring the effects of psilocybin on the brain. A quote from professor David Nutt:
Psychedelics are thought of as ‘mind-expanding’ drugs so it has commonly been assumed that they work by increasing brain activity, but surprisingly, we found that psilocybin actually caused activity to decrease in areas that have the densest connections with other areas. These hubs constrain our experience of the world and keep it orderly. We now know that deactivating these regions leads to a state in which the world is experienced as strange.
Here are links to abstracts from the first and second study.