Born in Millersburg, Kentucky, McDonald read law to enter the bar in 1830, and entered private practice in Washington, Indiana. He was a member of the Indiana General Assembly from 1833 to 1834, and a prosecuting attorney of the 7th Judicial Circuit of Indiana from 1834 to 1837, thereafter returning to private practice until 1839. He was a judge on the 10th Judicial Circuit of Indiana from 1839 to 1852, also serving as a professor of law at Indiana University from 1842 to 1852. He was again in private practice, this time in Indianapolis from 1853 to 1864.
On December 12, 1864, McDonald was nominated by President Abraham Lincoln to a seat on the United States District Court for the District of Indiana vacated by Albert Smith White. McDonald was confirmed by the United States Senate on December 13, 1864, and received his commission the same day, serving thereafter until his death, in Indianapolis.