Cap 2-4.5 cm broad, convex, broadly convex at maturity; surface smooth, moist, hygrophanous, chestnut-brown to rusty-brown, fading to yellow-brown to tan, the margin usually darker and appendiculate with veil fragments, the latter white, then dark-brown from maturing spores; flesh pallid, thin, fragile.
Gills adnate, crowded, narrow, light-brown becoming dark-brown in age.
Stipe 2-7 cm tall, 0.3-0.7 cm thick, hollow, fragile, equal or the base slightly enlarged; surface white, smooth; veil white, fibrillose, soon deciduous, remnants left on the cap margin or forming a faint superior annular zone.
Spores 4.5-6 x 3-3.5 microns, elliptical, smooth; spore print dark brown.
Grouped or clustered, usually at the base of hardwood stumps; fruiting from late fall to mid-winter.
Questionable. Described as edible in some texts but not substantial enough to be of culinary value. There is also the possibility of confusing this mushroom with the potentially deadly Galerina autumnalis (see below).
The genus Psathyrella is a large group, many of which are poorly known in the S.F. Bay Area. Psathyrella hydrophila is one of the few species that is relatively easy to recognize. It is distinguished by a clustered fruiting habit, usually at the base of hardwood stumps, a hygrophanous brown cap with appendiculate veil fragments that in age become colored with maturing spores, and a white, fragile stipe. Galerina autumnalis, a mushroom containing deadly amatoxins, is similar in color and size, but has a viscid/sticky cap when moist, the cap margin is typically striate, not appendiculate, and the spores are rusty-brown rather than dark brown.