Parsons was born in Brooklyn, New York on April 4, 1948 to an electrical technician and a homemaker.  He grew up in the Bedford-Stuyvesant area of Brooklyn. He skipped a grade in elementary school and another in high school. He later attended the University of Hawaii, where at 6’4″ tall he played varsity basketball. After four years, he was seven credits short of his diploma. However, he discovered that he could get into a law school in New York without a college degree if he scored well enough on his pre-law exams. Parson was accepted by Albany Law School, where he earned a Juris Doctor in 1971, finishing at the top of his class.
In 1971, Parsons served an internship at the New York State Legislature, at which time he was invited to work as a lawyer for the staff of the then New York Governor Nelson Rockefeller. When Rockefeller was appointed Vice President of the United States, in 1974, Parsons followed him to Washington D.C., where he worked directly with President Gerald Ford. He also met a deputy attorney general, Harold R. Tyler, and one of his aides, a young Rudolph W. Giuliani, with whom he was to be closely associated – supporting him in his campaign for New York mayor and heading his transitional council.
In 1977, Parsons returned to New York and became a partner after only two years at the Patterson, Belknap, Webb & Tyler law firm; also working at the firm was Giuliani. During his eleven years at the firm he took on Happy Rockefeller, the widow of Nelson (who had died in 1979) as a high-profile client. In 1988, he was recruited to serve as chief operating officer of the Dime Savings Bank of New York by CEO Harry W. Albright Jr., who was a former Rockefeller aide. He later became Chairman and CEO and oversaw a merger with Anchor Savings Bank; gaining a substantial sum when the Dime Bank was demutualized.
Three years later, in 1991, on the recommendation of Nelson’s brother Laurance Rockefeller to the then CEO Steven Ross, Parsons was invited to join Time Warner’s board; he subsequently became president of the company in 1995, recruited by Gerald Levin. He helped negotiate the company’s merger with America Online in 2000, creating a $165-billion media conglomerate.
In December 2001, it was announced that chief executive Gerald Levin would retire and Parsons was selected as his successor. The announcement surprised many media watchers who expected chief operating officer Robert Pittman to take the helm. In 2003, Parsons made the announcement of the name change from AOL Time Warner to simply Time Warner.
Parsons became chairman of Citigroup on 23 February 2009.
In 2007 Richard Parsons became the Chairman of the Board of Directors of the Jazz Foundation of America. He has worked with the Jazz Foundation to save the homes and the lives of America’s elderly jazz and blues musicians including musicians who survived Hurricane Katrina.
From the early 1980s through much of the 1990s, Parsons owned a house at Rockefeller family estate in Pocantico Hills, (see Kykuit), where his grandfather was once a groundskeeper. For a brief time he had worked for Nelson at the family office, Room 5600, at Rockefeller Center (he currently has a Time Warner office in Rockefeller Plaza at the Center).
Parsons is chairman emeritus of the Partnership for New York City, established by David Rockefeller in 1979, who has known him for many years. He is an advisory trustee of the family’s principal philanthropy, the Rockefeller Brothers Fund and he sits with David Rockefeller on the board of the World Trade Center Memorial Foundation. Parsons is also on the board of the family created Museum of Modern Art.
In 2001, United States President George W. Bush selected Parsons to co-chair a commission on Social Security. Parsons also worked on the transition team for Michael Bloomberg, who was elected Mayor of New York City in 2001. In 2006, Parsons was selected to co-chair the transition team for the incoming Governor of New York, Eliot Spitzer.
In August 2006, an article in New York Magazine reported that Parsons would likely run for Mayor of New York City in the 2009 New York mayoral election. Parsons, however, repeatedly denied the reports, supported Mayor Bloomberg’s efforts to repeal the term limits law and supported Bloomberg for a third term in office.
Parsons is now a member of the economic advisory team for President Barack Obama. He met with the then President-elect on Friday, November 7, 2008, along with many other economic experts, to discuss measures to solve the current economic crisis. After New Mexico Governor Bill Richardson withdrew his name from consideration for the position of Secretary of Commerce in the Obama Administration, Parsons’s name was floated as a possible nominee.