you get it in Mr Psychic's house in saffron city
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Head to saffron city go to the Pokemon center don't go in now go right until you see a house with a mailbox near it will read mr psychic's house head in and talk to him to receive the TM you guessed it psychic!
You have to use the TM to teach it Psychic.
Nowhere.
dig
Actually it's not a TM. You have to get a move tutor in FireRed or LeafGreen to teach it to a Pokemon.