The 22-year-old was England's man of the match against San Marino on Thursday night, when he was played by Three Lions boss Roy Hodgson in the holding position.
But Parlour feels the Arsenal man is at his best when he is in a more advanced position creating chances.
Wilshere's manager at club level, Arsene Wenger, has also hinted that the Gunners midfielder could have a future in the holding role - but Parlour disagrees.
"I really believe his best position is more of an advanced midfielder," the former Arsenal and England midfielder told Press Association Sport. "His game is best when he is doing those little one-twos around the penalty box.
"He knows exactly when to give it, he holds onto it enough and he does those driving runs forwards - I think that is Jack Wilshere at his best.
"I always think you've got to be playing on a regular basis in that regular position if you're going to be playing for your country. Roy Hodgson has got to make a big decision.
"Certainly I believe Jack Wilshere's position is more advanced and Roy will have to look into the further we get into the group and obviously in two years' time in the European Championships.
"Who plays there, I don't know. It is a situation where there is a big decision as to who play there but at the moment I'd like Jack further forwards, around that penalty box, creating chances."