Born in England in 1873, MacDonald came to Canada at age thirteen, where he studied at the Hamilton Art School in Ontario. He worked as a commercial artist for the Toronto Lithography Company, then moved to leading commercial design firm Grip Limited, where he would work for twenty years, progressing to become head designer. Here he met fellow artists Tom Thomson, Arthur Lismer and Franklin Carmichael. He would remain close friends with Thomson until his death in 1917. In the early years he was at Grip, he took classes at the Ontario School of Art under George Reid. In 1912 MacDonald left Grip but took on freelance work, and went on sketching trips around the Toronto environs with Lawren Harris. He also regularly went to Burks Fall in Muskoka and visited Group of Seven patron Dr. MacCallum on Georgian Bay.

In 1913 MacDonald moved to Thornhill, north of Toronto, to a property called Four Elms. In this same year, he journeyed with Harris to Mattawa on the Ottawa River and to the Laurentians. MacDonald’s first visit to Algonquin Park was in 1914, when he joined A.Y. Jackson and J.W. Beatty there. Financial and personal pressures hit MacDonald in 1917, and his health was precarious for part of that year.

In 1918 he went on the first Group of Seven boxcar trip to Algoma – along with Lawren Harris, Frank Johnson and Dr. MacCallum, and was revitalized by the experience. In Algoma, MacDonald received great inspiration – some of his most outstanding painting was done of this region. A transcendentalist who read Whitman and Henry David Thoreau, MacDonald believed that through nature, man reached a higher spiritual state. Amongst Group members, Algoma became known as “MacDonald's country.” For the next five years, he entered the most productive phase of his painting. He would make two more trips to Algoma - September 1919 - the second boxcar trip with Harris, Frank Johnston and A.Y. Jackson, and in 1920 - based at Mongoose Lake.

From 1921 to his death in 1932, MacDonald taught at the Ontario College of Art, and was appointed Principal in 1929. During his time there, he spent summers sketching at locations such as Lake Simcoe, north of Toronto, and Coboconk in the Haliburton region of Ontario. In 1922 he also went to Petite Riviere in Nova Scotia.

MacDonald also painted in the Rocky Mountains - his first trip there was in 1924 to Lake O’Hara. He made seven trips each August from 1924 to 1930, with his last trip based again at Lake O’Hara.

In 1931, after a mild stroke, MacDonald traveled to Barbados to recuperate, and inspired by the light and colour, painted quite a few sketches of flowers and the sea coast.

MacDonald was the oldest member of the Group of Seven, and along with Lawren Harris, was the moving spirit in the group. Considered an eloquent spokesman, he led them in their early battles against opposition to their ground-breaking art.