James Parkinson was born in Shoreditch, London, England. He was the son of John Parkinson, an apothecary and surgeon practising in Hoxton Square in London. In 1784 Parkinson was approved by the City of London Corporation as a surgeon. He never became a physician as many mistakenly call him.

On May 21, 1783, he married Mary Dale, with whom he subsequently had six children. Soon after he was married, Parkinson succeeded his father in his practice in 1, Hoxton Square. He believed that any worthwhile physician should know shorthand, at which he was adept.

In addition to his flourishing medical practice, Parkinson had an avid interest in geology and paleontology, as well as the politics of the day. Parkinson was a strong advocate for the under-privileged, and an outspoken critic of the Pitt government. His early career was marred by his being involved in a variety of social and revolutionary causes, and some historians think it most likely that he was a strong proponent for the French Revolution. He published nearly twenty political pamphlets in the post-French Revolution period, while Britain was in political chaos. Writing under his own name and his pseudonym "Old Hubert", he called for radical social reforms. Parkinson called for representation of the people in the House of Commons, the institution of annual parliaments, and universal suffrage. He was a member of several secret political societies, including the London Corresponding Society. In 1794 his membership in the organization led to his being examined under oath before William Pitt and the Privy Council to give evidence about a trumped-up plot to assassinate King George III. He refused to testify regarding his part in "The Pop-Gun Plot", until he was certain he would not be forced to incriminate himself. The plan was to use a poisoned dart fired from a "pop gun" to bring the king's reign to a premature conclusion. Fortunately for Parkinson, no charges were ever brought against him but several of his friends languished in prison for many months before being acquitted.

Parkinson turned away from his tumultuous political career, and between 1799 and 1807 published a number of medical works, including a work on gout in 1805. He was also responsible for the earliest writings on the subject of peritonitis in English medical literature. Parkinson was the first person to systematically describe 6 individuals with symptoms of the disease that bears his name. He did not actually examine these patients himself but observed them on daily walks. It was Jean Martin Charcot who coined the term "Parkinson's disease" over 60 years later. Parkinson was also interested in improving the general health and well-being of the population. He wrote several medical doctrines that exposed a similar zeal for the health and welfare of the people that was expressed by his political activism. He was a crusader for legal protection for the mentally ill, as well as their doctors and families.

In 1812 Parkinson assisted his son with the first described case of appendicitis in English, and the first instance in which perforation was shown to be the cause of death.

Parkinson's interest gradually turned from medicine to nature, specifically the relatively new field of geology, and paleontology. He began collecting specimens and drawings of fossils in the latter part of the eighteenth century. He took his children and friends on excursions to collect and observe fossil plants and animals. His attempts to learn more about fossil identification and interpretation were frustrated by a lack of available literature in English, and so he took the decision to improve matters by writing his own introduction to the study of fossils. In 1804 the first volume of his Organic Remains of a Former World was published. Gideon Mantell praised it as "the first attempt to give a familiar and scientific account of fossils". A second volume was published in 1808, and a third in 1811. Parkinson illustrated each volume and his daughter Emma coloured some of the plates. The plates were later re-used by Gideon Mantell. In 1822 Parkinson published the shorter "Elements of Oryctology: an Introduction to the Study of Fossil Organic Remains, especially of those found in British Strata". Parkinson also contributed several papers to William Nicholson’s "A Journal of Natural Philosophy, Chemistry and the Arts", and in the first, second, and fifth volumes of the "Geological Society’s Transactions".

On November 13, 1807, Parkinson and a number of other distinguished gentlemen met at the Freemasons' Tavern in London. The gathering included such great names as Sir Humphry Davy, Arthur Aikin and George Bellas Greenough. This was to be the first meeting of the Geological Society of London.

Parkinson belonged to a school of thought, Catastrophism, that concerned itself with the belief that the Earth's geology and biosphere were shaped by recent large-scale cataclysms. He cited the Noachian deluge of Genesis as an example, and he firmly believed that creation and extinction were processes guided by the hand of God. His view on Creation was that each 'day' was actually a much longer period, that lasted perhaps tens of thousands of years in length.

Parkinson's life is commemorated with a stone tablet inside the church of St Leonard's, Shoreditch, where he was a member of the congregation; his grave is in the churchyard of St Leonard's. In addition, there is a blue plaque at 1 Hoxton Square, marking the site of his home. Several fossils were also named after him.