As of the censusTemplate:GR of 2000, there were 991 people, 401 households, and 240 families residing in the town. The population density was 841.8 people per square mile (324.3/km²). There were 442 housing units at an average density of 375.4 per square mile (144.6/km²). The racial makeup of the town was 99.39% White, 0.10% Asian, 0.10% from other races, and 0.40% from two or more races. Hispanic or Latino of any race were 0.61% of the population.
There were 401 households out of which 25.4% had children under the age of 18 living with them, 50.6% were married couples living together, 7.5% had a female householder with no husband present, and 40.1% were non-families. 34.7% of all households were made up of individuals and 23.2% had someone living alone who was 65 years of age or older. The average household size was 2.22 and the average family size was 2.88.
In the town the population was spread out with 20.8% under the age of 18, 6.0% from 18 to 24, 22.9% from 25 to 44, 20.7% from 45 to 64, and 29.7% who were 65 years of age or older. The median age was 45 years. For every 100 females there were 90.9 males. For every 100 females age 18 and over, there were 85.1 males.
The median income for a household in the town was $28,618, and the median income for a family was $36,042. Males had a median income of $28,068 versus $19,250 for females. The per capita income for the town was $16,748. About 6.0% of families and 12.2% of the population were below the poverty line, including 13.6% of those under age 18 and 16.3% of those age 65 or over.
Parkers Prairie has a number of different primary and secondary industries, from machine parts manufacture to arable produce processing. The high-tech medical device company AbbeyMoor Medical has its head office and manufacturing plant in Parkers Prairie. AbbeyMoor Medical manufactures The Spanner, a prostatic stent.