We derive a kinetic formulation for the parametric decay instability of a large-amplitude, circularly polarized Alfv¿n wave based on a drift-kinetic description of the plasma. The formulation is not restricted to a Maxwellian ion plalsma but can be used for arbitrarily shaped ion distribution functions, e.g., those measured in the solar wind. We find that the MHD equations of the instability are recovered for the case that the ions are cold and the electrons carry all the thermal plasma energy. Even a small amount of ion thermal energy reduces the maximum growth rates of the instability below those obtained in an MHD treatment and broadens the unstable wave number range. Conversely, the presence of an ion beam or a plateau in the ion distribution function at velocities below the Alfv¿n velocity may give rise to enhanced growth rates. In the solar wind, the efficiency of the parametric decay instability is reduced both by kinetic effects and by the short correlation time of the driving Alfv¿n waves so that the instability probably cannot complete with the nonlinear energy cascade in shaping the turbulent energy spectra over short distances. However, the parametric decay instability may have an important influence on the reduction of the cross-helicity in the solar wind observed over large scales of the order of 1 AU. ¿American Geophysical Union 1990