I think u wrongly mentioned Gate instead of Body(Or bulk)..
Parasitic diode occurs because the substrate is P substrate(in Nmos) and the source and drain r n+regions.. So both the bulk and source(and drain) regions forms a diode.. When it is forward biased,it becomes an alternate path for current to flow and most of the currents may pass to the bulk instead of through the channel.. When reverse biased,it wil develop capacitance due to the inherent nature of the diode..