Lysergic acid diethylamide (LSD) is a potent serotonergic hallucinogen or psychedelic that modulates consciousness in a marked and novel way. This study sought to examine the acute and mid-term psychological effects of LSD in a controlled study. A total of 20 healthy volunteers participated in this within-subjects study. Participants received LSD (75 µg, intravenously) on one occasion and placebo (saline, intravenously) on another, in a balanced order, with at least 2 weeks separating sessions. Acute subjective effects were measured using the Altered States of Consciousness questionnaire and the Psychotomimetic States Inventory (PSI). A measure of optimism (the Revised Life Orientation Test), the Revised NEO Personality Inventory, and the Peter's Delusions Inventory were issued at baseline and 2 weeks after each session. LSD produced robust psychological effects; including heightened mood but also high scores on the PSI, an index of psychosis-like symptoms. Increased optimism and trait openness were observed 2 weeks after LSD (and not placebo) and there were no changes in delusional thinking. The present findings reinforce the view that psychedelics elicit psychosis-like symptoms acutely yet improve psychological wellbeing in the mid to long term. It is proposed that acute alterations in mood are secondary to a more fundamental modulation in the quality of cognition, and that increased cognitive flexibility subsequent to serotonin 2A receptor (5-HT2AR) stimulation promotes emotional lability during intoxication and leaves a residue of 'loosened cognition' in the mid to long term that is conducive to improved psychological wellbeing.