Despite a vaunted attack featuring Trinity Rodman, Ashley Sanchez and Ashley Hatch, Washington failed to score in four of the final five matches and averaged less than one goal per game.
Parsons, 37, had one year left on his contract.
“We are grateful for Mark’s contributions,” President of Soccer Operations Mark Krikorian said in a statement. “He helped lay a strong foundation and set us on a path to excellence. We wish him all the best in the future.”
Parsons, a native of England, had coached the Spirit in its first three NWSL seasons (2013-15) before moving to the Portland Thorns for six seasons and one championship.