Psilocybe subaeruginose was first described by Australian mycologist John Burton Cleland in 1927. At the time, it was placed in the section Cyanescens. A 1992 comparative study suggested that Ps. australiana, Ps. eucalypta, and Ps. tasmaniana are all Ps. subaeruginosa. This species is endemic to southern parts of Australia and New Zealand. It can be found mostly solitary, sometimes spread thinly, in wooded areas or areas with wood chips. Additional studies since then have rejected the synonymy with Ps. tasmaniana, though. Spores are dark purplish-brown, smooth, subellipsoid, measuring 13.2-14.3 x 6.6-7.7 x 6-7.5µm (not as flat as other species!) and has an apical germ spore.