Macnaghten was born in Bloomsbury, London, the second son of Sir Edmund Workman-Macnaghten, Bt., but grew up mainly at Roe Park, Limavady.

Having declined the offers of a judgeship from Gladstone in 1883 and the Home Secretaryship from the Conservatives in 1886, he was on 25 January 1887 appointed a Lord of Appeal in Ordinary with a life peerage as Baron Macnaghten, of Runkerry in the County of Antrim.

[6][7] Lord Macnaghten was made a Knight Grand Cross of the Order of St Michael and St George in 1902 and a Knight Grand Cross of the Order of the Bath in the 1911 coronation honours of George V. He also succeeded his elder brother, Francis, as fourth Baronet in the latter year.

Lord Macnaghten's most famous contribution to English law was the determination of categories of charitable trusts (in the case of Commissioners for Special Purposes of Income Tax v Pemsel).

An example is given in the case of Gluckstein v Barnes [1900] AC 240, where he refused to order that fraudulent company promoters should be entitled to contribution from other participants of the fraud.

But he complains that he may have a difficulty in recovering from his co-directors their share of the spoil, and he asks that the official liquidator may proceed against his associates before calling upon him to make good the whole amount with which he has been charged.

He married, in 1858, Frances Arabella (d. 1903), the only child of Sir Samuel Martin, a baron of the exchequer; they had five sons and six daughters.