The past decade has seen a huge increase in clinical research with psychedelic drugs and 3,4-methylenedioxymethamphetamine (MDMA), which have revealed great potential for treating mental health conditions. Given this progress in research, as well as the current unmet clinical need of millions of patients, in 2023, the Australian Therapeutic Goods Administration (TGA) approved the use of psilocybin for treatment-resistant depression and MDMA for PTSD to take effect from 1 July 2023. The campaign for TGA approval was led by a coalition comprising the Australian charity Mind Medicine Australia with support from Professor David Nutt, Drug Science, Professor Arthur Christopolous, Professor Chris Langmead (both from Monash University) and from large numbers of clinical, academic and patient groups. Under the rescheduling, current prescribing rights are limited to psychiatrists who have become authorised prescribers under the TGA's Authorised Prescriber Scheme, and psilocybin can only be used for treatment resistant depression and MDMA can only be used for PTSD. This paper reviews the background for this decision, its implications for approvals in other jurisdictions, as well as for the development pathways for other psychedelic drugs. LINKED ARTICLES: This article is part of a themed issue Emerging Therapeutic Opportunities for Psychedelic and Related Drugs. To view the other articles in this section visit http://onlinelibrary.wiley.com/doi/10.1111/bph.v183.14/issuetoc.