The psychological state elicited by the classic psychedelics drugs, such as LSD and psilocybin, is one of the most fascinating and yet least understood states of consciousness. However, with the advent of modern functional neuroimaging techniques, the effect of these drugs on neural activity is now being revealed, although many of the varied phenomenological features of the psychedelic state remain challenging to explain. Integrated information theory (IIT) is one of the foremost contemporary theories of consciousness, providing a mathematical formalization of both the quantity and quality of conscious experience. This theory can be applied to all known states of consciousness, including the psychedelic state. Using the results of functional neuroimaging data on the psychedelic state, the effects of psychedelic drugs on both the level and structure of consciousness can be explained in terms of the conceptual framework of IIT. This new IIT-based model of the psychedelic state provides an explanation for many of its phenomenological features, including unconstrained cognition, alterations in the structure and meaning of concepts and a sense of expanded awareness. This model also suggests that whilst cognitive flexibility, creativity, and imagination are enhanced during the psychedelic state, this occurs at the expense of cause-effect information, as well as degrading the brain’s ability to organize, categorize, and differentiate the constituents of conscious experience. Furthermore, the model generates specific predictions that can be tested using a combination of functional imaging techniques, as has been applied to the study of levels of consciousness during anesthesia and following brain injury.