- In the early 1930s, Parsons and Werner von Braun had hours of telephone conversations about rocketry in their respective countries as well as their own research.
- Parsons, Forman, and Malina often socialized, smoking marijuana and drinking, while Malina and Parsons set about writing a semiautobiographical science fiction screenplay they planned to pitch to Hollywood with strong anti-capitalist and pacifist themes.
- Parsons came to believe in the reality of Thelemic magick as a force that could be explained through quantum physics. Parsons adopted the Thelemic motto of Thelema Obtenteum Proedero Amoris Nuptiae, a Latin mistranslation of "The establishment of Thelema through the rituals of love". The initials of this motto spelled out T.O.P.A.N., also serving as the declaration "To Pan".
- He also became a regular at the Mañana Literary Society, which met in Laurel Canyon at the home of Parsons' friend Robert A. Heinlein and included science fiction writers including Cleve Cartmill, Jack Williamson, and Anthony Boucher.
- He was known for personal eccentricity such as greeting house guests with a large pet snake around his neck, driving to work in a rundown Pontiac, and using a mannequin dressed in a tuxedo with a bucket labelled "The Resident" as his mailbox.
- His wife Helen went away for a period in June 1941, during which Parsons, encouraged to do so by the sexually permissive attitude of the O.T.O., began a sexual relationship with her 17-year-old sister, Sara. Upon Helen's return, Sara asserted that she was Parsons' new wife, and Parsons himself admitted that he found Sara more sexually attractive than Helen. Conflicted in her feelings, Helen sought comfort in then Agape Lodge leader Wilfred Talbot Smith and began a relationship with him that lasted for the rest of his life; the four remained friends.
- The two couples, along with a number of other Thelemites (some of whom with their children), moved to 1003 South Orange Grove Avenue, an American Craftsman-style mansion. They all contributed to the rent of $100 a month and lived communally in what replaced Winona Boulevard as the new base of the Agape Lodge, maintaining an garden allotment and slaughtering their own livestock for meat as well as blood rituals. By 1943, 1003 South Orange Grove Avenue would be known as "the Parsonage."
- The Agape Lodge soon came under investigation by both the Pasadena Police Department and the FBI. Both had received allegations of a "black magic cult" involved in sexual orgies; one complainant was a 16-year-old boy who said that he was raped by lodge members, while neighbors reported a ritual involving a naked pregnant woman jumping through fire. After Parsons explained that the Lodge was simply "an organization dedicated to religious and philosophical speculation", neither agency found evidence of illegal activity and came to the conclusion that the Lodge constituted no threat to national security via Parsons' connection to Aerojet and JPL.
- Having been a long-term heavy user of alcohol and marijuana, Parsons now habitually used cocaine, amphetamines, peyote, mescaline, and opiates as well.
- Science fiction writer and U.S. Navy officer L. Ron Hubbard soon moved into the Parsonage; he and Parsons became close friends. Parsons wrote to Crowley that although Hubbard had "no formal training in Magick he has an extraordinary amount of experience and understanding in the field. From some of his experiences I deduce he is direct touch with some higher intelligence, possibly his Guardian Angel. ... He is the most Thelemic person I have ever met and is in complete accord with our own principles."
- Parsons and Sara were in an open relationship encouraged by the O.T.O.'s polyandrous sexual ethics, and she became enamored with Hubbard; Parsons, despite attempting to repress his passions, became intensely jealous. Motivated to find a new partner through occult means, Parsons began to devote his energies to conducting black magic, causing concern among fellow O.T.O. members who believed that it was invoking troublesome spirits into the Parsonage
- In December 1945 Parsons began a series of rituals based on Enochian magic during which he masturbated onto magical tablets, accompanied by Sergei Prokofiev's Second Violin Concerto. Describing this magical operation as the Babalon Working, he hoped to bring about the incarnation of Thelemite goddess Babalon onto Earth. He allowed Hubbard to take part as his "scribe", believing that he was particularly sensitive to detecting magical phenomena. As described by Richard Metzger, "Parsons jerked off in the name of spiritual advancement" while Hubbard "scanned the astral plane for signs and visions."
- Their final ritual took place in the Mojave Desert in late February 1946, during which Parsons abruptly decided that his undertaking was complete. On returning to the Parsonage he discovered that Marjorie Cameron—an unemployed illustrator and former Navy WAVE—had come to visit. Believing her to be the "elemental" woman and manifestation of Babalon that he had invoked, in early March Parsons began performing sex magic rituals with Cameron, who acted as his "Scarlet Woman", while Hubbard continued to participate as the amanuensis.
- Inspired by Crowley's novel Moonchild (1917), Parsons and Hubbard aimed to magically fertilize a "magical child" through immaculate conception, which when born to a woman somewhere on Earth nine months following the working's completion would become the Thelemic messiah embodying Babalon.
- Parsons co-founded a company called Allied Enterprises with Hubbard and Sara, into which Parsons invested his life savings of $20,970. Hubbard suggested that with this money they travel to Miami to purchase three yachts, which they would then sail through the Panama Canal to the West Coast, where they could sell them on for a profit. Parsons agreed, but many of his friends thought it was a bad idea. Hubbard had secretly requested permission from the U.S. Navy to sail to China and South and Central America on a mission to "collect writing material"; his real plans were for a world cruise.
- Left "flat broke" by this defrauding, Parsons was incensed when he discovered that Hubbard and Sara had left for Miami with $10,000 of the money; he suspected a scam but was placated by a telephone call from Hubbard and agreed to remain business partners. When Crowley, in a telegram to Germer, dismissed Parsons as a "weak fool" and victim to Hubbard and Sara's obvious confidence trick, Parsons changed his mind, flew to Miami and placed a temporary injunction and restraining order on them. Upon tracking them down to a harbor in County Causeway, Parsons discovered that the couple had purchased three yachts as planned; they tried to flee aboard one but hit a squall and were forced to return to port. Parsons was convinced that he had brought them to shore through a lesser banishing ritual of the pentagram containing an astrological, geomantic invocation of Bartzabel—a vengeful spirit of Mars.
- Allied Enterprises was dissolved and in a court settlement Hubbard was required to promise to reimburse Parsons. Parsons was discouraged from taking further action by Sara, who threatened to report him for statutory rape since their sexual relationship took place when she was under California's age of consent of 18. Parsons was ultimately compensated with only $2,900. Hubbard, already married to Margaret Grubb, bigamously married Sara and went on to found Dianetics and Scientology with Sara.
- In December 1969, The Sunday Times published an article about Hubbard's involvement with the O.T.O. and Parsons' occult activities. In response, the Church of Scientology released an unsubstantiated press statement which said that Hubbard had been sent as an undercover agent by the U.S. Navy to intercept and destroy Parsons' "black magic cult", and save Sara from its influence. The Church also stated that Robert A. Heinlein was the clandestine Navy operative who "sent in" Hubbard to undertake this operation.
- In 1949, the FBI stripped Parsons of his security clearances because of his "subversive" character, including his involvement in and advocacy of "sexual perversion" in the O.T.O.
- Unable to pursue his scientific career, without his wife Cameron, and devoid of friendship, Parsons decided to return to occultism and embarked on sexually based magical operations with prostitutes.
- Parsons professed to embody an entity named Belarion Armillus Al Dajjal, the Antichrist "who am come to fulfill the law of the Beast 666 [Aleister Crowley]".
- Through Heinlein, Parsons received a visit from writer L. Sprague de Camp, with whom he discussed magic and science fiction, and disclosed that Hubbard had sent a letter offering him Sara back.
- Parsons testified to a closed federal court that the moral philosophy of Thelema was both anti-fascist and anti-communist, emphasizing his belief in individualism. This along with references from his scientific colleagues resulted in his security clearance being reinstated by the Industrial Employment Review Board, which ruled that there was insufficient evidence that he had ever had communist sympathies. This allowed Parsons to obtain a contract in designing and constructing a chemical plant for the Hughes Aircraft Company in Culver City.
- Von Kármán put Parsons in touch with Herbert T. Rosenfeld, President of the Southern Californian chapter of the American Technion Society—a Zionist group dedicated to supporting the newly created State of Israel. Rosenfeld offered Parsons a job with the Israeli rocket program and hired him to produce technical reports for them. In November 1950, as the Red Scare intensified, Parsons decided to migrate to Israel to pursue Rosenfeld's offer, but a Hughes secretary whom Parsons had asked to type up a portfolio of technical documents reported him to the FBI. She accused Parsons of espionage and attempted theft of classified company documents on the basis of some of the reports that he had sought to submit to the Technion Society.
- Parsons was immediately fired from Hughes; the FBI investigated the complaint and were suspicious that Parsons was spying for the Israeli government. Parsons denied the allegations when interrogated; he insisted that his intentions were peaceful and that he had suffered an error of judgment in procuring the documents. Some of Parsons' scientific colleagues rallied to his defense, but the case against him worsened when the FBI investigated Rosenfeld for being linked to Soviet agents, and more accounts of his occult and sexually permissive activities at the Parsonage came to light.
- Parsons reconciled with Cameron, and they resumed their relationship and moved into a former coach house on Orange Grove Avenue. Parsons converted its large, first-floor laundry room into a home laboratory to work on his chemical and pyrotechnic projects, homebrew absinthe, and stockpile his materials.
- In 1952, Parsons and Cameron decided to travel to Mexico for a few months, both for a vacation and for Parsons to take up a job opportunity establishing an explosives factory for the Mexican government. They hoped that this would facilitate a move to Israel, where they could start a family, and where Parsons could bypass the U.S. government to recommence his rocketry career.
- On June 17, 1952, a day before their planned departure, Parsons received a rush order of explosives for a film set and began to work on it in his home laboratory. An explosion destroyed the lower part of the building, during which Parsons sustained mortal wounds. His right forearm was amputated, his legs and left arm were broken and a hole was torn in the right side of his face. Despite these critical injuries, Parsons was found conscious by the upstairs lodgers. He tried to communicate with the arriving ambulance workers, who rushed him to the Huntington Memorial Hospital, where he was declared dead approximately thirty-seven minutes after the explosion.
- When his mother, Ruth, learned of his death she immediately took a fatal overdose of barbiturates.
- Pasadena Police Department criminologist Don Harding led the official investigation; he concluded that Parsons had been mixing fulminate of mercury in a coffee can when he dropped it on the floor, causing the initial explosion, which worsened when it came into contact with other chemicals in the room. Forman considered this likely, stating that Parsons often had sweaty hands and could easily have dropped the can.
- Harding found a morphine-filled syringe at the scene, suggesting that Parsons was narcotized. The police saw insufficient evidence to continue the investigation and closed the case as an accidental death.
- Both Wolfe and Smith suggested that Parsons' death had been suicide, stating that he had suffered from depression for some time.
- Others theorized that the explosion was an assassination planned by Howard Hughes in response to Parsons' suspected theft of Hughes Aircraft Company documents.
- Cameron became convinced that Parsons had been murdered — either by police officers seeking vengeance for his role in the conviction of Earl Kynette or by anti-Zionists opposed to his work for Israel.
- One of Cameron's friends, the artist Renate Druks, later stated her belief that Parsons had died in a rite designed to create a homunculus.
- His death has never been definitively explained.