He was born in Saratoga, New York in 1787, the son of John McDonald, a Scottish immigrant.
He set up in business at Troy, New York but joined his older brother Charles in the timber and grain trade at Gananoque in 1815.
They built a large water-powered flour mill on the Gananoque River in 1826.
In 1836, he was named a commissioner for improving navigation on the Saint Lawrence River; McDonald became president of the commission in 1838.
In 1851, he passed control of the firm to his nephew, William Stone McDonald.