Place potatoes in a large pot and cover with water. Bring to a boil, reduce heat, and cook until tender, about 15-20 minutes. Drain, cool slightly, and slice into 1/4-inch rounds.
In a large skillet over medium heat, cook bacon until crisp. Remove bacon and set aside, reserving about 2 tablespoons of drippings in the skillet.
Add onion to the drippings and cook until softened, about 3-4 minutes.
Stir in vinegar, water, sugar, salt, and pepper. Bring to a simmer, stirring until sugar is dissolved.
Add sliced potatoes and cooked bacon to the skillet. Gently toss to coat with the warm dressing.
Sprinkle with fresh parsley before serving. Best served warm.