Psilocybe hispanica is a coprophilous fungus (dung-loving), and produces fruit bodies that grow solitarily or in dense groups on horse dung; sometimes more than 25 fruit bodies can arise from the same dung. In Guzmán's original report, they were found in a Pyrenean meadow in Aragon, at an elevation of . In 2003, the species was reported from Tramacastillo de Tena, a small village in the Pyrenees; it was also reported to have penetrated the French part of the Pyrenees. Within its restricted range, the mushroom is very common at altitudes of .