On October 2005, in a pre-season friendly representing Maccabi against the Toronto Raptors, Parker hit the game-winning shot with less than a second remaining to lead Maccabi to a 105-103 win at the Air Canada Centre. This gave the Raptors fans and management a glimpse of his abilities and in July 2006, Parker was officially signed by Raptors General Manager Bryan Colangelo as a free agent as part of a massive revamp of the 2006-07 Toronto team. He was signed for approximately $12 million (USD) over three years, joining recent European veteran acquisitions Jorge Garbajosa and Jose Calderon on the team. Parker quickly established himself as the starting shooting guard for Toronto and a well-respected three-point shooter in the NBA, ranking fourth in the league for three point field goal percentage by the end of the regular season. Overall, in his first season with Toronto, he averaged 12.4 ppg, 3.9 rpg, and 2.1 apg, leading his team in three point field goal percentage and free throw percentage. Parker's defensive and offensive versatility were credited as instrumental in helping the Raptors clinch their first-ever division title, first NBA Playoffs berth in five years, as well as best regular season record in franchise history. On 4 April 2007, the NBA also announced that Parker had been selected by a five-member panel of former players as the divisional winner of the 2006-07 NBA Sportsmanship Award. The annual award reflects the ideals of sportsmanship in amateur and professional basketball.
In the ongoing first round of the 2007 NBA Playoffs, Parker was chosen to man-mark New Jersey Nets' and former Toronto favorite Vince Carter. Parker was effective in shutting down Carter, restricting him to 13-for-43 shooting in the first two games.