In recent years there has been an increased interest in studies related to the welfare of avian species commonly kept as companion animals, specifically those in the order Psittaciformes, commonly referred to as 'parrots'. During this time the biology and behaviour of wild parrots has also become better understood, aiding the assessment of welfare in captive environments. The impact of the pet trade on wild parrot populations has also become clear. This order now has more globally threatened species than almost any other major group of birds. Many significant aspects of parrot behaviour in the wild, such as flocking, social interaction with conspecifics, foraging on a variety of foods and flight, are denied to varying degrees to parrots kept as companion animals. Captive parrots show high levels of stereotypy, suggesting poor welfare. Welfare may be improved by appropriate environmental enrichment and changes in the social environment of captive parrots kept as companion animals; however, such changes require that caretakers have sufficient knowledge, resources and motivation to accommodate such conditions. The concept of companion animal suitability is an important consideration when developing regulations or policy aimed at improving the welfare of animals kept as companions. Although individual exceptions exist and the level of suitability may vary depending on species, in general, their presence in the pet trade has resulted in serious animal welfare and conservation challenges for parrots, indicating that these animals may be unsuitable as human companions.