Psilocybin mushrooms, more commonly known as "magic mushrooms" are mushrooms which contain the psychedelic drugs psilocybin and psilocin. These chemicals have powerful hallucinogenic effects similar to LSD. There are over 150 species of mushrooms which contain these chemicals.
Psilocybin, Psilocin and the mushrooms themselves are illegal in most parts of the world. These mushrooms are not physically addictive and not very physically dangerous - an overdose death has never been recorded - but they should not be underestimated for their extremely powerful effects on the mind.
Psilocybin mushrooms do not cause mental illness in healthy people, but may quicken the onset of mental illness in a predisposed person (someone who was going to develop mental illness at some point anyway).
Psilocybin mushrooms and the active chemicals within, are highly illegal in most countries - though they also grow naturally on every continent except Antarctica. Mushrooms sold illegally are usually grown indoors in a controlled environment, however it is possible to hunt for them in the wild - this can be dangerous due to the risk of mistaking a poisonous mushroom for a psilocybin one (none of which are poisonous).
Psilocybin mushrooms should not be confused with Amanita muscaria mushrooms (red or yellow with white spots) which also have hallucinogenic effects (though very different from those of psylocybin mushrooms) and are very toxic if not prepared correctly, or if too much is eaten.