A nice differential-geometric framework for (non-abelian) higher gauge theory is provided by principal 2-bundles, i.e. categorified principal bundles. Their total spaces are Lie groupoids, local trivializations are kinds of Morita equivalences, and connections are Lie-2-algebra-valued 1-forms. In this article, we construct explicitly the parallel transport of a connection on a principal 2-bundle. Parallel transport along a path is a Morita equivalence between the fibres over the end points, and parallel transport along a surface is an intertwiner between Morita equivalences. We prove that our constructions fit into the general axiomatic framework for categorified parallel transport and surface holonomy.