Parsley cited ‘family reasons’as his reason for leaving the paper, which has seen its circulation break the 100,000 mark this year.
It is thought he took time off last year to care for his wife who has been diagnosed with cancer.
Parsley said: ‘It is with great regret that I feel I must end my time here as editor of City AM. I have enjoyed the past two years tremendously and wish the team every continued success.”
The paper’s chief executive Jens Torpe said: ‘We thank David for this achievements in helping establish City AM as a serious player in City news. We’re sorry to see him go and we wish him well for the future.”
News editor David Hellier will take over as acting editor when the paper resumes production on Tuesday after its week-long summer break.