Meditation and psychedelics have played key roles in humankind’s search for self-transcendence and personal change. However, neither their possible synergistic effects, nor related state and trait predictors have been experimentally studied. To elucidate these issues, we administered double-blind the model psychedelic drug psilocybin (315 μg/kg PO) or placebo to meditators (n = 39) during a 5-day mindfulness group retreat. Psilocybin increased meditation depth and incidence of positively experienced self-dissolution along the perception-hallucination continuum, without concomitant anxiety. Openness, optimism, and emotional reappraisal were predictors of the acute response. Compared with placebo, psilocybin enhanced post-intervention mindfulness and produced larger positive changes in psychosocial functioning at a 4-month follow-up, which were corroborated by external ratings, and associated with magnitude of acute self-dissolution experience. Meditation seems to enhance psilocybin’s positive effects while counteracting possible dysphoric responses. These findings highlight the interactions between non-pharmacological and pharmacological factors, and the role of emotion/attention regulation in shaping the experiential quality of psychedelic states, as well as the experience of selflessness as a modulator of behavior and attitudes. A better comprehension of mechanisms underlying most beneficial psychedelic experiences may guide therapeutic interventions across numerous mental conditions in the form of psychedelic-assisted applications.