Parnell grew up in a Derby family that ran a garage business and first attended Donington Park as a spectator in 1933, which prompted him to try racing himself. He began with an old 2-litre Bugatti single-seater purchased for £25 in 1935, though an early rear axle failure forced him to switch to a MG Magnette K3. He secured victories at both Brooklands and Donington Park, but in 1937 he lost his racing licence for two years following a practice incident at Brooklands in which he misjudged an overtaking move on Kay Petre, whose car rolled badly and ended her competitive career permanently.
The enforced absence proved formative: unable to drive, Parnell discovered that lending his cars to other drivers kept him close to the sport and developed his instincts as a team organiser — skills that would define the second half of his career. With his licence restored in 1939, he returned with a 4.9-litre Bugatti-engined car known as the BHW and began constructing his own voiturette car called the Challenger, though war interrupted the project before completion.
During the war years, Parnell completed the Challenger and assembled a comprehensive collection of racing machinery, including Alfa Romeo, ERA, Riley, Delage, MG and Maserati cars, dealing and trading to build both inventory and reputation in British racing circles.
Parnell resumed racing in 1946 with a Maserati 4CLT and various other machinery, finishing second to Prince Bira in the Ulster Trophy at Dundrod. In 1947, he was acclaimed as Britain's most successful racing driver and won the BRDC Gold Star. That year he travelled to Sweden for the 1947 Swedish Winter Grand Prix at Rommehed, the first race run under the newly-introduced Formula 1 regulations, and won outright — leading an ERA clean sweep of the podium and becoming the first winner of a Formula 1 race. He also showed his ingenuity by fitting twin rear wheels to his ERA to improve grip on the ice surface, a legal modification he had confirmed in the regulations beforehand and which proved decisive.
He retained the BRDC Gold Star in 1948, finishing third at the inaugural meeting at Zandvoort, winning the Goodwood Trophy at the first-ever Goodwood meeting, and competing across Europe. His frequent success at Goodwood earned him the nickname "Emperor of Goodwood."
For the inaugural 1950 Formula One World Championship race at Silverstone, Parnell received a remarkable invitation: Alfa Romeo asked him to drive its fourth works car alongside the factory lineup. He finished third, behind teammates Giuseppe Farina and Luigi Fagioli, to claim the only podium of his World Championship career and stood as the sole British driver to be selected to race with the all-conquering Alfa Romeo works team.
He subsequently raced a Maserati under the Scuderia Ambrosiana banner and became involved with BRM as both a test and lead driver of the BRM Type 15, although the car's unreliability meant he often reverted to his Maserati. Tony Vandervell also engaged Parnell to drive the Thinwall Special — a heavily modified Ferrari 375 — in several Formula One events. At the 1951 BRDC International Trophy at Silverstone, Parnell led the field in appalling conditions of hail, lightning and six inches of standing water before the race was halted after six laps; though no official winner was declared, he had been a minute clear of the Alfa Romeos. He continued to race into 1954, winning in his own Ferrari 625 at Goodwood, Snetterton and Crystal Palace.
Parnell was engaged by Aston Martin following his 1950 Silverstone result and competed extensively in sportscars alongside his single-seater commitments. He co-drove a DB2 to sixth overall and second in class at the 1950 24 Hours of Le Mans with Charles Brackenbury, then added a class win at the RAC Tourist Trophy at Dundrod. Further class victories with the DB2 at Silverstone and Boreham followed in 1952. At the 1953 Mille Miglia, he and navigator Louis Klemantaski finished fifth overall in an Aston Martin DB3 despite having to wire the throttle fully open after a breakage — the highest-ever finish by a British car at the event. He also finished second at the 12 Hours of Sebring that year and won the Goodwood Nine Hours.
Parnell assumed team management duties at Goodwood in 1952 when a pit fire seriously injured Aston Martin team manager John Wyer, and he subsequently became Aston Martin's formal team manager. He oversaw the team's celebrated 1–2 finish at the 1959 24 Hours of Le Mans, when Roy Salvadori and Carroll Shelby led home Maurice Trintignant and Paul Frère. He then guided Aston Martin's entry into Formula One, before the factory programme was abandoned at the end of 1960.
In 1961, Parnell took over management of the Yeoman Credit Racing Team, running John Surtees and Roy Salvadori in Cooper-Climax machinery. For 1962 the team raced as Bowmaker-Yeoman Racing with Lola Mk4 chassis; Surtees scored 19 championship points and finished fourth in the Drivers' Championship, taking two second-place finishes and a pole position. After Bowmakers withdrew, Parnell established Reg Parnell Racing in Hounslow, running a young Chris Amon in 1963. Observers credited his ability to identify and nurture talent, having backed John Surtees, Chris Amon and Mike Hailwood in their formative years.
Parnell died on 7 January 1964 at age 52 from peritonitis following complications after an appendix operation, cutting short plans for a new car he had already commissioned for the season. His son Tim Parnell, also a racing driver, took over management of the team and went on to develop a productive working relationship with BRM in the late 1960s. Reg Parnell's influence on British motorsport — as a driver who competed from the pre-war era through to the opening seasons of the World Championship, and as a manager who nurtured some of the sport's significant talents — remains one of the more quietly consequential careers of his generation.