The neighborhood was settled by John McDonald in 1775 and was the site of a fort and Indian trading post. McDonald was one of the judges of the Youghiogheny County courts. The McDonald Hotel was the first hotel in neighborhood. The borough of McDonald was first incorporated on November 11, 1889. Railroad agent S.S. Johns was first burgess. McDonald had its first boom in 1889-1890. It has since developed a large coal mining section.
As of the 2010 census, McDonald had a population of 2,149 people. Out of that population, 1,766 lived in the Washington County part of the borough and 383 lived in the Allegheny County portion. In the past, bottles, oil-well drilling tools and flour-mill products factories thrived in McDonald. Fort Cherry School District is located in McDonald. There are four borders to McDonald, including North and South Fayette, Cecil Township and Robinson Township. McDonald has been the home to a couple newspapers over the years. The Record-Outlook was eventually owned by the Observer Publishing Company (based out of Washington, PA). After several years as such, it eventually became the Record-Enterprise and closed in 1999. Two movies were filmed in the community, Homecoming and Warrior. Famous people from the neighborhood include NFL coach Marvin Lewis and Oscar-winning songwriter Jay Livingston.