The school has its origins in the educational work begun by the Dominican Sisters of Stone in 1856.
Michael Hughes, from St Dominic's Parents' Action Group, said they are "relieved" and "thrilled" after being handed control of the Catholic school.
St Dominic's Priory in Stone, Staffordshire, was going to close after the school's trustees said they were no longer able to support it financially.
But after three weeks of campaigning, the parents' action group will now run the new charitable trust.
Parents insist they have many ideas to make the school financially viable.
The St Dominic's Parents' Action Group was formed when parents were first notified that the existing trustees of the school, the English Dominican Congregation, were unable to run the school. The Congregation said that the finances were not stacking up.
Comprehensive business plan
The action group gained the support of parents, staff, former pupils and the local community. Following emergency meetings, the parents presented a business plan outlining a review of the school's operations to the trustees.
St Dominic's Priory School will transfer to a new charitable trust, established by the parents, that will attempt to ensure the continuation and long term future of the independent school.
A joint statement read: "The terms agreed include: a financial contribution for the new Trust from the English Dominican Congregation; two of the school's eleven governors to be appointed by the Congregation; and the school leasing and licensing the grounds on which it operates from the Congregation."
Mr Hughes is adamant that they will be able to make it work: "The trustees of the existing trust have given us some money to help set the trust up and we believe we don't need that much money... the school itself is entirely viable; it was making money until just two or three years ago.
"We have a five-year plan. The plan shows us coming back to profits quite quickly in year two.
"I think we're just giving it a bit more of a commercial focus. There's lots of things schools can do in terms of getting additional income which haven't been there," added Mr Hughes.
One suggestion to improve the school's finances is to get parents to use a credit card that pays money to their charity. Other suggestions include renting out parts of the school - such as the drama studio - and setting up summer camps.
Maintaining links with the church
The school sits in the grounds of St Dominic's Convent and the action group insist that it will maintain very close links with the Church.
Sister Pauline Burling of the English Dominican Congregation said: "I welcome these developments which will lead to the continuation of this fine Dominican school.
"We share the desire of parents to see the school flourish and provide for the future the same exceptional education and guidance it has offered pupils for nearly eight decades."
Convent sisters from the original trust will also be putting forward candidates to sit on the board of governors. In total, 11 people will sit, including four parents and five independents (including the Lord of Stafford).
Elated headteacher, Mrs Pat Adamson, said: "We have been encouraged by many strong messages of support from parents, pupils, teaching staff, alumni of the school and the wider local community; and I would like to reassure parents that St. Dominic's will become even stronger and will be able to offer an even better education for their children.
"The unity demonstrated over the past few weeks will carry us forward to reach new heights. This is a key time in the life of a wonderful, progressive school."
The school was founded in 1934; and is open to all faith denominations. It takes boys in the prep and junior School, and girls from two years old up to 18.
It was declared 'excellent' by the Independent Schools Inspectorate at the end of last year.