[1] The town is named after William Donald, a Scottish pastoralist who was the first settler in the area in 1844.

The Donald Post Office opened on 1 August 1870[2] replacing that of nearby Mount Jeffcott which had operated since 1860.

The town grew steadily boosted by the closer settlement of the surrounding countryside and the arrival of the railway in 1882.

[citation needed] The area also suffered a major drought period in the 1990s and 2000s, significantly impacting the community which primarily relies on crop farming to survive.

The formally recognised traditional owners for the area in which Donald sits are the Wotjobaluk, Jaadwa, Jadawadjali, Wergaia and Jupagik nations.

[7] The most common ancestries in Donald were English 43.1%, Australian 39.8%, Scottish 13.2%, Irish 13.2% and German 3.6%.

[9] The township successfully bid at auction to purchase a metal sculpture of the Nassau Grouper fish, which was used during the 2006 Melbourne Commonwealth Games to represent the country of Belize.

Though this was badly damaged in a storm, with the top of the tree falling down, it was re-erected using a metal pole and concrete.