Wes Unseld, executive vice president of Washington Sports and Entertainment, announced Parsons' appointment to the post with the team, which will debut as part of the 2-year-old women's professional basketball league.
Washington Sports and Entertainment owns the Mystics and the Washington Wizards.
For the past 10 years, Parsons has been head women's basketball coach and assistant athletic director at Christopher Newport University in Newport News, Va.
Christopher Newport, which was 183-83 under Parsons, finished its best-ever season, advancing to the second round of the NCAA Division III basketball tournament.
Parsons was named Dixie Conference coach of the year three times.
"Cathy (Parsons) will add a wealth of experience and commitment to winning that will be an attractive combination for our team," said Mystics head coach Jim Lewis.
Parsons is the second Hagerstown native to become a women's professional basketball coach.
Belinda "Bo" Pearman is a member of the New England Blizzard staff of the rival American Basketball League.
Martinsburg, W.Va., native Vicky Bullett plays for the Charlotte Sting, one of the WNBA's original eight teams.
Parsons' move to the Mystics follows years of work to set standards for women's basketball.
Parsons and Pearman were friends while playing high school basketball. Parsons graduated from North in 1979 and Pearman from South Hagerstown in 1980. They were two of Washington County's first major girls basketball stars.
Parsons played for West Virginia University, and when she graduated in 1984 she was the Lady Mountaineers' all-time scoring leader, a record she still holds. Lewis, a friend of Parsons through coaching, is a 1969 graduate of WVU.
Parsons played for Norfolk in the Women's American Basketball Association, one of the United States' many defunct women's professional leagues, before trying out for the chance to become the first woman player on the Harlem Globetrotters. She lost out to Lynette Woodard.
When her playing days ended, Parsons began coaching. She became an assistant at Providence College, a Division I program, before accepting the Christopher Newport position in 1988.
The WNBA, backed and sanctioned by the NBA, plays a 28-game schedule from June through August.
"There is a lot of emotions about leaving Christopher Newport, but I'm ready for a change," Parsons said.
Because of the financial backing and stability of the NBA, the WNBA has no time period in which it must prove itself.
"The pressure is on for me to produce now," Parsons said. "I'm not worried about getting fired. I'd rather have the WNBA on the top of my resume instead of Christopher Newport when I go for my next job."