In 1891, Macdonald was appointed the Holt Fellow in Physiology at University College, Liverpool, where he did research under Francis Gotch from 1891 to 1897. After gaining his medical qualifications, he served as house physician at the Liverpool Royal Infirmary for about six months in 1897, under James Barr. From 1897 to 1899, he was a lecturer in physiology at University College, Dundee under Waymouth Reid. In 1899, he returned to University College, Liverpool, as senior lecturer in physiology, with a British Medical Association research scholarship, under Charles Scott Sherrington. From 1903 to 1914, Macdonald held the Chair in Physiology at the University College, Sheffield. In 1906–1907, he additionally served as the acting Dean of the Medical Faculty, during the period when the college became Sheffield University. At Sheffield he planned the physiology department, which was at that date one of the leading facilities in the subject in England. In 1914, he returned to the University of Liverpool, succeeding Sherrington as the Holt Professor of Physiology, where he remained until his retirement in 1932. He also served as the Dean of the Medical Faculty.
Research
Macdonald's early work was on nerves, initially in collaboration with first Francis Gotch and then Waymouth Reid. W. J. O'Connor states: He continued to research this topic at Liverpool, publishing a series of papers in the Journal of Physiology and the Proceedings of the Royal Society. He studied nerve electrical currents, potassium and chloride ions, among other topics. In around 1908, he began to research the mechanism of contraction in striated muscle, publishing an influential paper on the topic in the Quarterly Journal of Experimental Physiology. In around 1912, his attention turned to the problem of measuring muscular work in humans. He built a human calorimeter, now in the Wellcome Medical Museum, with which he studied how the heat produced was related to factors such as the intensity of exercise and the subject's weight. With F. A. Duffield, he also studied respiratory gas exchange.
Macdonald married Katherine Mary Stewart, who was from Stornaway, in 1898. The couple had eight children, three sons and five daughters. One of his daughters, Margaret S. Macdonald, collaborated with Macdonald at the end of his career. After his retirement, he lived with his son in Lincolnshire and at Bridge of Allan in Stirlingshire, Scotland. He died at Bridge of Allan in 1941.