Shared Mass Hallucination

"Explanation" cooked up by unbelievers whenever something that contradicts the Masquerade is very, very public.

Hallucinations don't work that way, even if multiple people were exposed to the same hallucinogen, they wouldn't see the same thing. The only time it's remotely plausible is if the people were already expecting to see whatever it was they believed they saw (which, in fact, is a very large part of how Stage Magic is performed) - and even then, they probably wouldn't share the particular details of the hallucination.

It's up there on the Stupid Explanations Chart with "it was a weather balloon" except that it's said with a straight face. See also Gas Leak Coverup.

Note that mass hallucination and mass hysteria are two different things.

Examples of Shared Mass Hallucination include:

Anime and Manga

Pretty much the idea behind Chaos;Head, but it runs on the idea in reverse: if you can get more than one person to see the same thing (real or not), it suddenly becomes real.
A Pokémon episode had the police attibuting reports of an Aerodactyl attack to mass dreams.
The mages of Mahou Sensei Negima use something like this maintain their Masquerade. A villain attempting to reveal said Masquerade used just the opposite: remove people's logical reaction to disbelieve the mystic, then spread over the planet to make sure no skeptic is left unbelieving (magically powered suggestion on a massive scale).
Galaxy Railways episode 12. An old woman is confused and thinks Manabu is her son... until she and her fields disappear, leaving behind a gravestone--seems she was a ghost. One character suggests that maybe it really was a ghost, or maybe it was a hallucination. Keep in mind that multiple people saw it and were able to talk to her and get knowledge they didn't already have, such as her name, which matched the name on the gravestone.

Comic Books

In the old X-Factor comic, they blamed Inferno on mass hallucinations caused by A.I.M. satellites. At least it's plausible given the weird tech that villain groups have.
Used to explain a false Angel sighting in Global Frequency.

Film

The Men in Black do this after using their neuralyzers, which make the targets extremely suceptible to suggestions, allowing the Men in Black to craft a plausible suggestion that everybody "saw."
EPA official Walter Peck's explanation for the ghosts in Ghostbusters:

Peck: These men use nerve gasses to induce hallucinations. People think they're seeing ghosts and they call these bozos, who show up with a fake light show.

Literature

The ending of Contact has the folks on Earth writing off the experience of the protagonists as one big Mind Screw. In the film, there is only a single person sent through the machine, so it's written off as either a hallucination or something she made up.
"Ghost V", a short story by Robert Sheckley saw the protagonists land on a deserted planet and see mass hallucinations of the monsters they invented in their childhood. It turned out, the planet's atmosphere contained a hallucinogen that forced humans to relive their childhood fears, which became really dangerous if Your Mind Makes It Real.
In the Hitchhiker's novel So Long and Thanks for All the Fish, soon after Arthur Dent lands to his shock on Earth, he is told that the Vogons' apparent destruction of the planet (the very premise of the series) was a CIA-induced mass hallucination. In fact, Dent has landed on an Earth rebuilt by the dolphins.
The Master and Margarita, everything the Devil did is later explained as hypnosis, mass hypnosis, or, in one case, long distance hypnosis.
In a Suzumiya Haruhi short story, Snow Mountain Syndrome, the plot of the entire story (almost a day long) was explained to the titular character as shared Highway Hypnosis. From wandering in a blizzard.
Graveyard School namedrops this in one book, then immediately has it subverted. It's never made quite clear how The Masquerade remained intact after a supposedly hallucinated dinosaur ate a teacher.
The Futurological Congress describes drugs so effective at masking reality that the subject cannot tell which of his perceptions have been altered, and which have not. Everyone is under the influence, but the protagonist takes a drug that cancels the effect.

Live Action TV

Doctor Who and Torchwood. Thank God for Martha.
- It seems to be implied in Doctor Who that it isn't so much a case of outright disbelief so much as humans responding to the threat of something very scary and out of their control with the rather useless tactic of pretending it didn't happen. Evidence that this is the case was provided in the 2007 Christmas episode, where the Doctor found London to be almost completely deserted due to the usual inhabitants having realised that Christmas in London = dangerous weird stuff and cleared off.
- In the first episode of Torchwood, Gwen tells Jack that Rhys is convinced that a lot of the weird alien goings on were the results of drugs in the water and mass hallucinations (to which Jack replies "Well, your boyfriend is stupid.").
In CSI, Grissom refers to the alien conspiracy theorist club to having a shared mass hallucination. Of course, they saw this as a part of the evil police force working for the reptilians trying to put them down.

Religion

After the resurrection of Jesus, Roman troops were coerced into claiming that Jesus' disciples overcame them and stole the body, despite them all having good alibis. After reports of Jesus walking and talking for a full forty days after his alleged demise, the Romans claimed that he was Only Mostly Dead despite three days being far more than any human could survive without treatment after flagellation alone, much less flagellation, crucifixion, and a spear through the heart. Somewhat subverted in that Christianity eventually became the official state religion of the Roman Empire.
- Of course seeing how people who knew Jesus well took a long time to even recognise that this person even looked like their spiritual leader, it can be questioned if he was indeed the same person before and after the crucifixion.

Video Games

In Professor Layton and the Diabolical Box, this actually happens, and it's the explanation for the entire second half of the game. The game uses the "expectations" justification by having photos of the town set up at the train station. Since all the main characters get to the town by way of the train, they all see the photos so they all see the same thing. Presumably any varying details aren't worth talking about.

Web Comics

In Girl Genius, it really was a shared mass hallucination. It was caused through a combination of a gas inducing a hypnotic hallucinatory state and someone yelling about the Heterodynes being back.
- Even so, there was some disagreement about the details.

Western Animation

In the Looney Tunes short "Punch Trunk" people are thrown into a panic at sightings of a six-inch-tall elephant. An expert comes on television to dismiss it as a mass hallucination caused by the stress of modern life - only to be undercut by the elephant wandering into the studio.

Real Life

A penis panic is a form of mass hysteria where groups of people suddenly become convinced that their genitals are shrinking or disappearing.