Neurological and psychiatric disorders are considered one of the major problems of today's societies and cause many individual and social problems. Current treatments are effective, but due to their burdens, there is always an effort to introduce novel treatments. Psychedelics, a diverse group of psychoactive compounds, including LSD, psilocybin, DMT, MDMA, and ketamine, have shown potential in modulating neurologic and psychiatric disorders due to several mechanisms. This review investigates the therapeutic potential of psychedelics in both neurologic and neuropsychiatric disorders due to their several mechanisms such as anti-inflammatory, anti-oxidative, and biological properties. This study was conducted across major databases, such as PubMed, Scopus, Web of Science, Google Scholar, and Medline, due to the systematically searched literature including clinical, preclinical, and in vitro studies. Psychedelic compounds such as psilocybin, LSD, and MDMA have demonstrated beneficial effects across various models of neuropsychiatric and neurologic disorders, including depression, PTSD, Alzheimer's disease, and Parkinson's disease. These effects are mediated through multiple mechanisms, including anti-inflammatory actions (e.g., downregulation of cytokines such as IL-6 and TNF-α), antioxidant activity (e.g., induction of SOD), and enhancement of neuroplasticity through increased expression of brain-derived neurotrophic factor such as BDNF. Additionally, psychedelics modulate key neurotransmitter systems, notably increasing synaptic levels of serotonin and dopamine, which are critically involved in mood regulation and cognitive function. Compared to conventional treatments, psychedelics offer faster onset, durable effects, and possible disease-modifying properties, making them promising candidates for future neurotherapeutics.