Psychedelic drugs have profound effects on perception, cognition, and mood. How psychedelics affect neural signaling to produce these effects remains poorly understood. We investigated the effect of the classic psychedelic psilocybin on neural activity patterns and spatial encoding in the retrosplenial cortex of head-fixed mice navigating on a treadmill. The place specificity of neurons to distinct locations along the belt was reduced by psilocybin. Moreover, the stability of place-related activity across trials decreased. Psilocybin also reduced the functional connectivity among simultaneously recorded neurons. The 5-HT2AR (serotonin 2A receptor) antagonist ketanserin blocked the majority of these effects. These data are consistent with proposals that psychedelics increase the entropy of neural signaling, and provide a potential neural mechanism contributing to disorientation frequently reported by humans after taking psychedelics.