American mycologist Alexander H. Smith first described the species in 1937 as a member of the genus known today as Psathyrella; it was transferred to Psilocybe by Rolf Singer in 1958.

Psilocybe pelliculosa is found in the Pacific Northwest region of the United States and Canada, where it grows on the ground in groups or clusters along trails or forest roads in coniferous woods.

Several mushroom species that are similar in appearance to P. pelliculosa can be distinguished by subtle differences in the form of the fruit body, or by microscopic characteristics.

The species was first described scientifically by Alexander H. Smith in 1937 as Psathyra pelliculosa,[nb 1] based on specimens he collected in Washington and Oregon.

[4] After reevaluating these two species in addition to several others closely related, Rolf Singer and Smith later reestablished the taxon and transferred it to Psilocybe in 1958.

The stem is 6 to 8 cm (2+3⁄8 to 3+1⁄8 in) long by 1.5 to 2 mm (1⁄16 to 3⁄32 in) thick, and roughly equal in width throughout except for a slightly enlarged base; rather pliant but rigid.

[3] The cap cuticle (an ixocutis) is made of a layer of roughly horizontal, gelatinized, wavy, hyaline hyphae that are 0.8–5.5 μm in diameter.

Psilocybe pelliculosa may be distinguished from Psathyra fagicola by the presence of a partial veil, firm gills, and smaller fruit bodies.

[3] The fungus prefers to fruit in disturbed areas such as trails and abandoned forest roads;[16] it is not commonly found in grasslands.

[8] It is known from the Pacific Northwest region of North America where it has been collected in California, Idaho, Oregon, Washington,[5][17] and it is widely distributed in British Columbia, Canada.