The US shock jock spliced together segments of an audio book read by Parton, making it seem that she had made offensive remarks.
During Stern's reworked tape, it sounds like Parton says: "Linda Ronstadt is a really fat tub of s**t".
Later in the tape she appears to say: "Johnny Carson had a dark black c*** that hung down to his knees."
Responding to the skit, Parton said in an official statement: "I have never been so shocked, hurt and humiliated in all my life. I cannot believe what Howard Stern has done to me.
"In a blue million years, I would never have such vulgar things come out of my mouth. They have done editing or some sort of trickery to make this horrible, horrible thing."
The veteran country singer added: "Please accept my apology for them and certainly know I had nothing to do with this.
"If there was ever going to be a lawsuit, it's going to be over this. Just wanted you to know that I am completely devastated by this."