Understanding altered states of consciousness induced by psychedelic drugs is crucial for advancing our knowledge of conscious perception and developing clinical applications for psychiatric conditions. Recently, technological advances in virtual reality (VR) headsets and deep neural network for generative computer vision have enabled the controlled, immersive simulation of visual hallucinations. Although there is some evidence that simulated visual hallucinations increase cognitive flexibility, comprehensive experimental data on how this artificially altered perceptual phenomenology affects high-level human cognition is lacking. We addressed this gap by measuring a wide range of behavioral tasks in human participants after the exposure to VR immersive panoramic (360°) videos and their psychedelic counterparts generated by the DeepDream algorithm. Participants exhibited reduced task-switching costs after simulated psychedelic exposure compared to naturalistic exposure when instructed to invert the stimulus-response mapping, consistent with increased cognitive flexibility. No significant differences were observed between naturalistic and simulated psychedelic exposure in linguistic association tasks at word and sentence levels. Crucially, we found that visually grounded high-level cognitive processes were modulated by exposure to simulated hallucinations, as evidenced by participants’ drawing performance. These findings reveal how altering perceptual phenomenology through simulated visual hallucinations significantly modulates high-level human cognition. Our results provide insights into the interdependence of bottom-up and top-down cognitive processes and encourage further investigation into the effects of artificial psychedelic experiences on human cognition. This research may offer valuable insights into altered states of consciousness without pharmacological intervention, potentially informing both basic neuroscience and clinical applications.