Jones was born in Texarkana, Arkansas, and grew up in Torrance, California, after his family relocated. His nickname "Parnelli" was bestowed by a boyhood friend who was trying to disguise Jones's real identity so his family would not discover he was racing at age seventeen. Jones began competing in jalopy races at Carrell Speedway in Gardena, California, and refined his skills across multiple disciplines including stock cars, sprint cars, and midget cars throughout the 1950s. He recorded fifteen victories in the NASCAR Pacific Coast Late Model Series before moving to national-level competition.
Jones became one of the defining figures of the Indianapolis 500 in the early 1960s. He was named co-Rookie of the Year at the 1961 race alongside Bobby Marshman despite leading early before being struck in the face by a stone. In 1962, sponsored by promoter J. C. Agajanian, Jones became the first driver to qualify at the Indianapolis 500 at over 150 mph, earning pole position at 150.370 mph (241.997 km/h).
The 1963 Indianapolis 500 delivered his greatest triumph and generated one of the race's most debated controversies. As Jim Clark's Lotus-Ford closed on him in the final laps, Jones's car developed a crack in its external oil reservoir. Car owner Agajanian successfully argued to chief steward Harlan Fengler that the leak had stopped, and Jones was not black-flagged. He won the race, with the controversy — including Colin Chapman's protests — marking the clash between the old Indianapolis establishment and the emerging rear-engine era.
In 1967, Jones drove the STP-Paxton Turbocar for owner Andy Granatelli. The turbine-powered machine was vastly superior in speed and dominated the race, but a failed transmission bearing with just three laps remaining ended Jones's run. The following year he withdrew from Indy after judging his assigned turbine car to be unsafe, and retired from IndyCar driving shortly thereafter.
Jones won the 1961 Midwest Sprint Car championship and the 1963 Pikes Peak International Hill Climb in a Mercury Marauder stock car. In 1964, he won seven USAC Stock Car races to take the championship. He also won multiple Turkey Night Grand Prix midget events. In Trans-Am competition, Jones joined Bud Moore Engineering with Mercury and Ford and ultimately won the 1970 Trans-Am Drivers' Championship.
After a conversation with vehicle fabricator Bill Stroppe challenged his courage in the desert in 1967, Jones entered off-road racing and became one of its defining figures. Driving a specially fabricated vehicle named "Big Oly" sponsored by Olympia Beer, Jones won the 1971 NORRA Mexican 1000 from start to finish in a record time of 14 hours and 59 minutes — the first off-road win by an Indianapolis 500 champion. He went on to win back-to-back Mexican 1000s, a Mint 400, and a Baja 500.
Jones co-founded Vel's Parnelli Jones Racing, which won the Indianapolis 500 in 1970 and 1971 with driver Al Unser at the wheel of the Johnny Lightning Special. The team also captured the 1970, 1971, and 1972 USAC National Championships. Jones subsequently owned the Parnelli Formula One team from late 1974 to early 1976, though it achieved limited results. He later supported off-road drivers as an owner, including Walker Evans's 1976 SCORE championship season.
Outside racing, Jones built a substantial commercial enterprise. He operated 47 retail Parnelli Jones Tire Centers across four states, ran Parnelli Jones Enterprises as a chain of Firestone Racing Tires in fourteen western states, and developed wheel manufacturing companies including Rebel Wheel, US Mags, and American Racing Equipment.
Jones retired from racing with six IndyCar wins, twelve pole positions, seven Trans-Am victories, the 1970 Trans-Am championship, four NASCAR wins in 34 starts, and numerous successes in sprint cars, midget cars, and off-road events. He was inducted into multiple halls of fame: the Off-Road Motorsports Hall of Fame (1978), Indianapolis Motor Speedway Hall of Fame (1985), International Motorsports Hall of Fame (1990), National Midget Auto Racing Hall of Fame (1990), National Sprint Car Hall of Fame (1991), and the Motorsports Hall of Fame of America (1992). Jones died in Torrance, California, on June 4, 2024, at the age of 90.