He was born in Perth on 18 May 1813 and educated at Perth Academy. He studied Divinity at St Andrews University and Divinity Hall in Edinburgh studying under David Welsh and Thomas Chalmers. He filled a vacant post at Logiealmond in 1836 but without ordination. He was ordained by the Church of Scotland at Blairgowrie in 1837. His patron was Mr Oliphant of Gask. He left the established church in the Disruption of 1843. Together with a group of other ministers from Central Scotland including Robert McCheyne and Andrew Bonar, they conceived the idea of the Free Church "like a torch of fire in a sheaf". This symbol was widely adopted by the Free Church. It is often mistaken for a burning bush as described in the Bible story in Exodus. Along with Rev Thomas Chalmers he was one of the main figures in organising the building of New College on the Mound in Edinburgh. His other main work for the Free Church was the establishment of the Non-Conformist School System across all Scotland, which in turn paved the way for the Education Act 1872. From 1843 he organised the 300 parish teachers, formerly paid by the Church of Scotland, who had left to join the Free Church. The first year was financially very difficult. MacDonald set to raise £50,000 to cover the needed costs. In the assembly of 1844 he announced that he had secured subscriptions of £52,000 therefore fully meeting his objectives. He was translated to North Leith Free Church on Ferry Road in Edinburgh in 1857. He lived nearby at 2 Jamaica Street now called Summerside Place. The congregation increased from 450 to 1100 under his ministry. St Andrews University awarded him an honorary doctorate in 1870. He retired in 1879 and went to lived at 11 Gloucester Place in Stockbridge, Edinburgh. His ministry at North Leith was taken over by the RevThomas Crerar. In 1882 he succeeded Rev William Laughton as Moderator of the General Assembly, the highest position in the Free Church of Scotland. He was succeeded in turn in 1885 by Rev Horatius Bonar. He died in Edinburgh on 21 August 1893. He is buried in Warriston Cemetery in north Edinburgh. The grave lies on the south side of the central roundel. MacDonald's North Leith Free Church at 74 Ferry Road was demolished in 1983 to make way for a care home. However, the "Burning Sheaf" stone, bearing the date 1843, was salvaged and now stands in the church hall of North Leith Church nearby on Madeira Street.
Family
He was married to Catherine Malcolm. Robert McCheyne, is noted as his "groomsman", what is now called best man at their wedding. They had at least two daughters.