Serotonin emerges as a pivotal factor influencing the growth and functionality of β-cells. Psilocybin, a natural compound derived from mushrooms of the Psilocybe genus, exerts agonistic effects on the serotonin 5-HT2A and 5-HT2B receptors, thereby mimicking serotonin’s behavior. This study investigates the potential impacts of psilocybin on β-cell viability, dedifferentiation, and function using an in vitro system. The INS-1 832/13 Rat Insulinoma cell line underwent psilocybin pretreatment, followed by exposure to high glucose-high lipid (HG-HL) conditions for specific time periods. After being harvested from treated cells, total transcript and cellular protein were utilized for further investigation. Our findings implied that psilocybin administration effectively mitigates HG-HL-stimulated β-cell loss, potentially mediated through the modulation of apoptotic biomarkers, which is possibly related to the mitigation of TXNIP, STAT-1, and STAT-3 phosphorylation. Furthermore, psilocybin exhibits the capacity to modulate the expression of key genes associated with β-cell dedifferentiation, including Pou5f1 and Nanog, indicating its potential in attenuating β-cell dedifferentiation. This research lays the groundwork for further exploration into the therapeutic potential of psilocybin in Type II diabetes intervention.