Psychedelics can acutely induce mystical experiences and elevated positive mood, which may contribute to the potential benefits of psychedelic therapy. However, there remains limited understanding of the occurrence and importance of specific positive emotional experiences within psychedelic therapy. Therefore, we examined the effects of psychedelics on positive emotional experiences and their association with improvements in mental health. : Study 1 was an observational study of naturalistic psychedelic use. Study 2 used data from a clinical trial that compared psilocybin with escitalopram in individuals with major depressive disorder. In this trial, participants completed two dosing sessions, where they received either 25mg or 1mg of psilocybin. In both studies, following their psychedelic experience or psilocybin dosing sessions, participants rated their acute experiences of seven specific positive emotional experiences (self-compassion, compassion toward others, gratitude, love, awe, ecstasy, and peace). Relative to low-dose psychedelic, medium and high-dose psychedelic use were associated with greater positive emotional experiences. Relative to 1mg psilocybin, 25mg psilocybin was associated with greater positive emotional experiences. Several positive emotional experiences predicted improvements in mental health and mediated treatment outcomes, with the strongest evidence for the effect of self-compassion (over and above mystical experience and positive mood). Positive emotional experiences, especially self-compassion, appear to play an important role within psychedelic therapy. Based on these findings, we highlight key considerations surrounding psychotherapeutic approaches to, and optimization of, psychedelic therapy. Future research should move beyond retrospective, self-reports of emotional experiences to fully capture their role within psychedelic therapy.