Donahue helped form Mercury Rev,[2][3] along with vocalist/guitarist David Baker, bassist Dave Fridmann, guitarist and clarinetist Grasshopper (born Sean Mackowiak), rooster-tail bass flutist Suzanne Thorpe, and drummer Jimy Chambers, in the late 1980s as a source to create soundtracks to the members' personal student films.

The members were further encouraged to explore their talents by their mentor, minimalist composer and multimedia artist Tony Conrad.

He later joined the band as the full-time lead guitarist and played on the albums In a Priest Driven Ambulance and Hit to Death in the Future Head.

Donahue left the band shortly after recording Hit to Death in the Future Head and was replaced by Oklahoma City guitarist Ronald Jones.

Donahue was credited as having played the clarinet line for The Chemical Brothers' 1997 cult hit "The Private Psychedelic Reel", which has been the on and off closing song to their shows ever since.