The 20-year-old will now head to Championship side Preston North End as he looks for first-team experience at the Deepdale Stadium.
Parrott has made four appearances for Tottenham and was included on the club's pre-season tour of Asia.
The forward, who has two Premier League outings under his belt, is in contention to make his Lilywhites bow in this weekend's Championship clash away in Wigan.
Preston manager Ryan Lowe told his club's website: "Troy's one I've monitored for some time.
"His work ethic is fantastic, his hold-up play is very good for the style he is, but ultimately we want Troy to score goals for us.
"We've beaten some fantastic competition to get him. I'm really pleased to get him on board, he's going to be a fantastic addition."
Parrott spent last season on-loan at MK Dons where he scored eight goals in 41 League One appearances.
The player, who has enjoyed previous loan spells with Millwall and Ipswich, also boasts 15 international caps.
At Preston, Parrott will join his Irish compatriots Greg Cunningham, Alan Browne, Robbie Brady and Sean Maguire.
"I'm buzzing to get going, to come in and see the place, meet the lads and get going really," he said.
"I like the sound of how the team wants to play, they want to create a lot of chances which for me is a no-brainer really, and obviously the Irish boys here also helps."