First established as The Chase School, the institution was founded in 1896 by the American impressionist painter William Merritt Chase (1849–1916). Chase led a small group of Progressives who seceded from the Art Students League of New York in search of a more free, more dramatic, and more individual expression of art. The Chase School changed its name in 1898 to The New York School of Art.
In 1904, Frank Alvah Parsons joined artist Robert Henri as a teacher at the school. In the same approximate time frame, Parsons studied for two years with the vanguard artist and educator, Arthur Wesley Dow at Columbia University graduating in 1905 with a degree in fine arts. A few years later, he became president of The New York School of Art. Anticipating a new wave of the Industrial Revolution, Parsons predicted that art and design would soon be inexorably linked to the engines of industry. His vision was borne out in a series of firsts for the school, establishing the first program in fashion design, interior design, advertising, and graphic design in the United States. In 1909, the school was renamed The New York School of Fine and Applied Art to reflect these offerings. Parsons became the sole director in 1911, a position which he maintained to his death in 1930. William M. Odom, who established the school's Paris ateliers in 1921, succeeded Parsons as president. In honor of Parsons, who was important in steering the school's development and in shaping visual-arts education through his theories about linking art and industry throughout the world, the institution became the Parsons School of Design in 1936.
As the modern curriculum developed, many successful designers remained closely tied to the school, and by the mid-1960s, Parsons had become "the training ground for Seventh Avenue."
In 1970, the school became a division of the New School for Social Research, which later evolved into The New School. The campus moved from Sutton Place to Greenwich Village in 1972. The merger with a vigorous, fully accredited university was a source of new funding and energy, which expanded the focus of a Parsons education.
In 2005, when the parent institution was renamed The New School, the school undergone a rebranding in which it was renamed Parsons The New School for Design. In 2015, the institution dropped "The New School" from its formal title and has since been referred to as The New School's Parsons School of Design.