Gandalf mushrooms have specific characteristics that aid in their identification. They typically have caps (pileus) that are light brown in early growth that then fade to a grayish white at full development with yellow-brown tones found, too. The caps have a diameter of approximately 0.5 to two centimeters. Initially, they are hemispheric and later expand to a bell-shaped (campanulate) or convex shape. When young, the cap margin is incurved. As they dry out, the caps become slightly hygrophanous, losing their color and often developing cracks in dry weather. Depending on the weather, if too dry, the caps may crack and bruise blue.

They typically have slim, elongated stems with a conical cap covered that expands and flattens with maturity. Their gills are broad, tight, semi-attached to the stem, and have a speckled, cloudy appearance. The gills of Gandalf are attached to the stem in a broadly adnate to adnexed manner. Adnate attachment means the gills are mostly attached, while adnexed attachment means they are only slightly attached. These gills are close, black or grey in color, and exhibit a spotty, speckled, or cloudy appearance. This appearance is caused by the spores ripening together in tiny patches on the gill surface. The different patches darken at different times, resulting in a mottled appearance. As the spores mature, the gills turn black. It is worth noting that all species, except for Panaeolus foenisecii, produce a jet black spore print.

However, the most prominent identifying feature is their intense blue bruising reaction, which occurs when the mushrooms are handled or damaged. It is not uncommon for their caps to be bruised. While it is important to mention that this bruising reaction happens to all psilocybin-containing mushrooms, the caps often don’t bruise as much as they do in Gandalf.