UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): August 16, 2006

PARKER-HANNIFIN CORPORATION

(Exact Name of Registrant as Specified in Charter)

Registrant’s telephone number, including area code: (216) 896-3000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Item 1.01 Entry into a Material Definitive Agreement.

Non-Employee Directors Compensation

On August 17, 2006, the Board of Directors of the Registrant approved the following changes to the cash compensation of the non-employee members of the Board of Directors effective as of October 1, 2006:

A summary of the compensation of the non-employee members of the Board of Directors is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Restricted Stock Awards to Non-Employee Directors

On August 16, 2006, the Human Resources and Compensation Committee of the Board of Directors (the “Compensation Committee”) of the Corporation authorized, pursuant to the Corporation’s 2004 Non-Employee Directors’ Stock Incentive Plan, a grant of 1,125 shares of restricted stock to each of its non-employee directors. The restricted stock will be issued on October 1, 2006 subject to the terms and conditions set forth in the form of grant letter attached hereto as Exhibit 10.2 and incorporated herein by reference.

Stock Option Awards with Tandem Stock Appreciation Rights to Executive Officers

On August 16, 2006, the Compensation Committee, pursuant to the Corporation’s 2003 Stock Incentive Plan, as amended and restated, authorized a grant of stock options with tandem stock appreciation rights to each of its executive officers, including the named executive officers listed below:

The stock options with tandem stock appreciation rights were granted using the form of grant letter attached hereto as Exhibit 10.3 and incorporated herein by reference.

Target Incentive Bonus Awards

On August 16, 2006, the Compensation Committee approved a target incentive bonus award, an annual cash incentive based on the Corporation’s free cash flow margin for fiscal year 2007, to Robert P. Barker, one of the Corporation’s named executive officers, and certain other executive officers. Mr. Barker’s target bonus is $85,000. The target bonus was granted using the form of award letter attached hereto as Exhibit 10.4 and incorporated herein by reference.

Bonus Awards Under the Corporation’s Performance Bonus Plan

On August 16, 2006, the Compensation Committee, approved the following annual and long-term bonus awards pursuant to the Corporation’s Performance Bonus Plan which is incorporated herein by reference:

Target Bonus Awards to Named Executive Officers

A 2007 target bonus award, an annual cash incentive based on the Corporation’s free cash flow margin for fiscal year 2007, was awarded to the named executive officers listed below:

These target bonus awards were granted pursuant to the form of award letter attached hereto as Exhibit 10.5 and incorporated herein by reference.

Long-Term Incentive (“LTI”) Awards to Executive Officers

A target 2006-07-08 LTI award was awarded to each of the executive officers, including the named executive officers listed below:

These target LTI awards are based on the Corporation’s revenue growth, earnings per share growth and return on invested capital during the three-year performance period as compared to the results of its peers for each of the foregoing performance measures. These awards were granted pursuant to the form of award letter attached hereto as Exhibit 10.6 and incorporated herein by reference.

Return on Net Asset (“RONA”) Bonus Awards to Named Executive Officers

A RONA bonus award, an annual cash incentive based on the Corporation’s fiscal year 2007 return on net assets, to the four named executive officers listed below:

These RONA awards were granted pursuant to the form of award letter attached hereto as Exhibit 10.7 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 22, 2006

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