He is perhaps best known for his time as the Scotland national football team manager, including their appearance at the 1978 FIFA World Cup.

MacLeod played as a left winger for Third Lanark (two spells), St Mirren, Blackburn Rovers, Hibernian and Ayr United.

Managed by fellow Scot Dally Duncan, MacLeod was man of the match in the 1960 FA Cup Final, but the game was lost 3–0 to Wolves.

[2] After success with Ayr and Aberdeen, in May 1977 the Scottish Football Association appointed him manager of the Scotland national team.

In his first months in charge, Scotland beat England at Wembley and qualified for the 1978 World Cup from a group containing Czechoslovakia, who had won the 1976 European Championship, and Wales.

[2] Scotland's World Cup expectations gathered momentum with MacLeod happy with the wave of massive optimism, saying to the press his team would return with "at least a medal".

[2] Scottish comedian Andy Cameron recorded a version of "Ally's Tartan Army", which reached number 6 in the UK charts just before the World Cup.

Spirits remained sky-high as 25,000 people came to Hampden Park to watch the squad circle the ground in an open-top bus prior to their departure for Argentina.

"[4] This anecdote, though, is denied in some accounts of the Scottish saga at the 1978 World Cup[5] and has been cited as one of the most popular hoaxes in British football.

[2] Before the match journalist James McKillop had written in The Glasgow Herald that "The suggestion that we might not win is unthinkable and can be dismissed out of hand.

[2] The next day's The Glasgow Herald ran the result of the Iran game as their main story under the headline "Ally's night of shame".

[8] For the Netherlands match MacLeod gave Graeme Souness his first game of the World Cup and was rewarded with a much-improved team performance.

[2] Following the squads return to Scotland, Macleod's future was discussed by the SFA's International Committee at a meeting in July to consider the team's failure in Argentina.

[9] An editorial in the same newspaper noted that "the football public expected more from Mr MacLeod in the Scotland job than he was able to deliver.

"[10] Although MacLeod had survived this immediate inquest by the sport's authorities, he resigned after one more game in charge,[2] only 17 matches and about 500 days after his appointment.

MacLeod accepted the offer although Ayr were in the second tier and the job was thought to pay around £12,000 per year, £3,000 less than he received as Scotland manager.

[11] MacLeod's departure left Scotland needing to quickly appoint a manager ahead of their next UEFA Euro 1980 qualifying match against Norway.