Several phase II studies have demonstrated that psilocybin-assisted therapy shows therapeutic potential across a spectrum of neuropsychiatric conditions, including major depressive disorder (MDD). However, the mechanisms underlying its often persisting beneficial effects remain unclear. Observational research suggests that improvements in psychological flexibility may mediate therapeutic effects. However, no psychedelic trials to date have substantiated this finding in a clinical sample. In an exploratory placebo-controlled, within-subject, fixed-order study, individuals with moderate to severe MDD were administered placebo (n = 19) followed by psilocybin (0.3 mg/kg) (n = 15) 4 weeks later. Dosing sessions were embedded within a manualized psychotherapy that incorporated principles of Acceptance and Commitment Therapy. Depression severity, psychological flexibility, mindfulness, and values-congruent living were measured over a 16-weeks study period. Psychological flexibility, several facets of mindfulness, and values-congruent living significantly improved following psilocybin and were maintained through week 16. Additionally, improvements in psychological flexibility and experiential acceptance were strongly associated with reductions in depression severity following psilocybin. These findings support the theoretical premise of integrating psilocybin treatment with psychotherapeutic platforms that target psychological flexibility and add to emerging evidence that increasing psychological flexibility may be an important putative mechanism of change in psilocybin-assisted therapy for MDD and potentially, other mental health conditions.