In a Dutch oven over medium-high heat, add beef, onion, and garlic and cook until beef is cooked through. Drain fat.
Add water, tomato sauce, diced tomatoes, Italian seasoning, salt, pepper, and sugar. Bring to a boil over high heat. Break spaghetti noodles in half and add to pan. Reduce heat to a simmer and cover. Cook, stirring often, until noodles are cooked through, 12 to 15 minutes.
Stir in the Parmesan and parsley just before serving.