The 22-year-old departs the English capital following a seven-year spell with the Lilywhites, during which time he only made four senior appearances in the 2019-20 season.
Hailed as a striker with enormous potential following his arrival from Belvedere in the summer of 2017, Parrott ultimately failed to make the grade in North London, as neither Jose Mourinho nor Antonio Conte deemed him ready for regular Premier League football.
Parrott spent five separate loan spells away from Tottenham, four of which saw him join lower-league English clubs, as he represented Millwall, MK Dons, Preston North End and Ipswich Town.
Injury prevented the Dublin-born forward from playing his way into Ange Postecoglou's good books last summer, but he established himself as a force to be reckoned with in the Eredivisie with SBV Excelsior, scoring 17 goals and setting up five more in 32 games.
Parrott: 'AZ is the perfect club for me'
Parrott's contract at Tottenham was due to expire in the summer of 2025, and rather than lose him on a free transfer in 12 months' time, the Lilywhites agreed a deal worth a reported £6.7m to sell him to AZ Alkmaar.
Speaking to the Dutch giants' website after signing a five-year deal until 2029, Parrott hailed AZ as the "perfect" club for him to continue progressing and talked up the influence of one of his former Alkmaar teammates.
"Before I signed here, I heard a lot of good things about AZ and I spoke to Kenzo Goudmijn, among others, who I became friends with when I played with him," the Irishman said.
"I think AZ is the perfect club for me to take the next steps in my development. I will take the useful experience from last year with me. It helps me that I already played in the Netherlands last season and am therefore used to the competition and life here. In short, I am very happy to be here and can't wait to meet the supporters in the stadium."
Max Huiberts - director of football affairs for AZ Alkmaar - revealed that Parrott did not take a lot of persuading to leave Tottenham for the Netherlands, claiming that both he and his management made their desires "very clear".
Parrott follows six players out of Tottenham door
"It wasn't that difficult to convince Troy, because we quickly got the feeling that he wanted to play for AZ. Both Troy and his management made this very clear to us. He has had a good season, especially in the final phase and play-offs," Huiberts added.
"He has shown in the Eredivisie that he can easily score goals. We have followed him for a long time and with the information we have, we are convinced that he fits in well with AZ with his qualities.
"The fact that Troy has already played so many international matches at a young age tells me a lot. Among other things, that he is used to playing matches with high resistance at that level. With the arrival of Troy, we have covered the striker position again with many good options."
Parrott has become the sixth player to leave Tottenham this summer and the second for a transfer fee, as Joe Rodon was sold to Leeds United in a £10m deal at the same time Archie Gray joined the Lilywhites.
Meanwhile, Eric Dier, Ryan Sessegnon, Japhet Tanganga and Ivan Perisic left when their contracts expired, while all-time record signing Tanguy Ndombele had his contract terminated.