A soft parameter function penalized normalized maximum correntropy criterion (SPF-NMCC) algorithm is proposed for sparse system identification. The proposed SPF-NMCC algorithm is derived on the basis of the normalized adaptive filter theory, the maximum correntropy criterion (MCC) algorithm and zero-attracting techniques. A soft parameter function is incorporated into the cost function of the traditional normalized MCC (NMCC) algorithm to exploit the sparsity properties of the sparse signals. The proposed SPF-NMCC algorithm is mathematically derived in detail. As a result, the proposed SPF-NMCC algorithm can provide an efficient zero attractor term to effectively attract the zero taps and near-zero coefficients to zero, and, hence, it can speed up the convergence. Furthermore, the estimation behaviors are obtained by estimating a sparse system and a sparse acoustic echo channel. Computer simulation results indicate that the proposed SPF-NMCC algorithm can achieve a better performance in comparison with the MCC, NMCC, LMS (least mean square) algorithms and their zero attraction forms in terms of both convergence speed and steady-state performance.