Psilocybe "magic mushrooms" are best known for their indolethylamine psilocybin, yet they encode enzymes for a much more diverse arsenal of small and potentially bioactive molecules. Here, we report on four Psilocybe cubensis clade III sesquiterpene synthases, CubB-CubE, whose genes are differently expressed in fruiting bodies compared to vegetative mycelium. CubB-CubE were functionally characterized in vitro by product formation assays with heterologously produced enzymes and in vivo by transgene expression in Aspergillus niger, followed by extensive GC-MS analyses. CubB was identified as a single product (3R,6E)-(-)-nerolidol synthase. CubC is a multi-product enzyme producing β-caryophyllene, β-elemene, α-humulene, and β-farnesene. CubD and CubE catalyzed (near-)exclusively sterpurene formation. P. cubensis young fruiting bodies and vegetative mycelium were analyzed for sesquiterpenes which verified the presence of the CubB product α-(3R,6E)-(-)-nerolidol. As various Psilocybe species encode highly similar enzymes, this study contributes generally to the as yet little understood secondary metabolome of the genus.