Jens Torpe, City AM chief executive, said: "We thank David for his achievements in helping establish City AM as a serious player in London City news. We're sorry to see him go and we wish him well for the future."
Parsley said: "It is with great regret that I feel I must end my time as editor of City AM. I have enjoyed the past two years tremendously and wish the team every continued success."
Parsley will leave today and news editor David Hellier will be acting editor when City AM resumes publishing on August 28 after its summer break, which began on August 20.
The paper has already begun the process of recruiting a new editor.
City AM launched in September 2005 and now has a daily circulation of just under 100,000, according to the latest ABC figures.
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