The karyotype of most birds has remained considerably stable during more than 100 million years’ evolution, except for some groups, such as parrots. The evolutionary processes and underlying genetic mechanism of chromosomal rearrangements in parrots, however, are poorly understood. Here, using chromosome-level assemblies of four parrot genomes, we uncover frequent chromosome fusions and fissions, with most of them occurring independently among lineages. The increased activities of chromosomal rearrangements in parrots are likely associated with parrot-specific loss of two genes, ALC1 and PARP3, that have known functions in the repair of double-strand breaks and maintenance of genome stability. We further find that the fusion of the ZW sex chromosomes and chromosome 11 has created a pair of neo-sex chromosomes in the ancestor of parrots, and the chromosome 25 has been further added to the sex chromosomes in monk parakeet. Together, the combination of our genomic and cytogenetic analyses characterizes the complex evolutionary history of chromosomal rearrangements and sex chromosomes in parrots.