While it has long been known that added fluid mass may be important in the dynamics of parachutes, due to inadequate or incorrect derivation and/or implementation of the added mass tensor its full significance in the stability of parachutes has yet to be appreciated. The concept of added mass is outlined and some general conditions for its significance are presented. Its implementation in the parachute equations of motion is reviewed, and the equations used in previous treatments are shown to be erroneous. A general method for finding the equivalent external forces and moments due to added mass is given, and the correct, anisotropic forms of the added mass tensor are derived for the six degree-of-freedom motion in an ideal fluid of rigid body shapes with planar-, twofold- and axisymmetry, These derivations may also be useful in dynamic stability studies of other low relative density bodies such as airships, balloons, submarines and torpedoes. Full nonlinear solutions of the equations of motion for the axisymmetric parachute have been obtained, and results indicate that added mass effects are more significant than previously predicted. In particular, the component of added mass along the axis of symmetry has a strong influence on stability. Better data on unsteady forces and moments on parachutes are needed.