Past research suggests that use of psychedelic substances such as LSD or psilocybin may have positive effects on mood and feelings of social connectedness. These psychological effects are thought to be highly sensitive to context, but robust and direct evidence for them in a naturalistic setting is scarce. In a series of field studies involving over 1,200 participants across six multiday mass gatherings in the United States and the United Kingdom, we investigated the effects of psychedelic substance use on transformative experience, social connectedness, and positive mood. This approach allowed us to test preregistered hypotheses with high ecological validity and statistical precision. Controlling for a host of demographic variables and the use of other psychoactive substances, we found that psychedelic substance use was significantly associated with positive mood—an effect sequentially mediated by self-reported transformative experience and increased social connectedness. These effects were particularly pronounced for those who had taken psychedelic substances within the last 24 h (compared to the last week). Overall, this research provides robust evidence for positive affective and social consequences of psychedelic substance use in naturalistic settings.