Woods was born in Hobeni, Transkei, now part of the Eastern Cape, South Africa, where his family had lived for five generations. His ancestors came to South Africa as part of a British and Irish group known as the 1820 Settlers. His parents ran a trading post in Transkei, a tribal reserve, which would later be designated a bantustan. As a boy Woods had extensive regular contact with the Bomvana people. He spoke fluent Xhosa and Afrikaans, as well as his mother tongue, English. Woods and his brother, Harland, were sent to the Christian Brothers College in Kimberley in the predominantly Afrikaner Northern Cape for their secondary education. The school was academically rigorous, and the Irish Christian Brothers were regarded as being neutral on questions of politics. While Woods was away at school, the National Party came to power in 1948 and began to build the apartheid structure. When he started his law course at the University of Cape Town in 1952, Woods supported government policies that separated the races but was wary of the heavy hand of the Afrikaner National Party. During his legal studies he started to question the separatist views he grew up with, becoming politically active in the Federal Party, which rejected apartheid and drew its support from liberal English-speaking whites. Woods spent two years as a legal apprentice, with the goal of becoming a barrister, but he became bored with law and gravitated toward journalism. Just as he was about to embark on his career as a journalist, the 23-year-old Woods was approached by the Federal Party to run for a seat in parliament. His campaign was unsuccessful, and he went back to his job as a cub reporter for the Daily Dispatch newspaper in East London. For two years during the late 1950s, he honed his skills as a journalist by writing and sub-editing for various newspapers in England and Wales. It was while working in Wales that he developed a love and respect for the Welsh people that endured all his life. Before returning to South Africa, he served as a correspondent for London's now defunct Daily Herald, traveling throughout the eastern and southern United States, eventually arriving in Little Rock, Arkansas, where he filed stories comparing U.S. segregation with South Africa's apartheid.
Woods went back to work at the Dispatch and married Wendy Bruce, whom he had known since they were teenagers in their hometown. They had six children: Jane, Dillon, Duncan, Gavin, Lindsay, and Mary. Their fourth son, Lindsay, born in 1970, contracted meningitis and died just before his first birthday. The family had settled into a comfortable life in East London, and in 1965, at the age of 31, Woods rose to the position of editor in chief of the Daily Dispatch, which held an anti-apartheid editorial policy. As editor, Woods expanded the readership of the Dispatch to include Afrikaans speakers as well as black readers in nearby Transkei and Ciskei. Woods integrated the editorial staff and flouted apartheid policies by seating black, white, and "coloured" reporters in the same work area. Additionally, he favored hiring reporters who had had experience working overseas. Woods had several scrapes with the South African Security Police regarding editorial matters and on numerous occasions ruffled the feathers of Prime Minister B. J. Vorster in frank, face-to-face exchanges regarding the content of Dispatch editorials. Woods found himself tiptoeing around, and sometimes directly challenging, the increasingly restrictive government policies enacted to control the South African press.
Under Woods, the Daily Dispatch was very critical of the South African government, but was also critical of the emerging Black Consciousness Movement under the leadership of Steve Biko. A young black woman, Mamphela Ramphele, berated Woods for writing misleading stories about the movement, challenging him to meet with Biko.
The two men became friends, leading to the South African Bureau Of State Security monitoring Woods's movements. Despite this, Woods continued to provide political support to Biko, both through writing editorials in his newspaper and controversially hiring black journalists to the Daily Dispatch.
On June 16, 1976, rioting broke out in Soweto, in which young students from Soweto participated in a march to protest against being taught in Afrikaans and against the Bantu education system in general. They marched from the Morris Isaacson School intending to hold a rally outside the Education buildings in Johannesburg. The schoolchildren were met by the police and ordered to disperse. The children refused and the police opened fire, killing more than 700 of them. As the children pelted the police with stones, South Africa went up in flames. The government responded by banning the entire Black Consciousness Movement along with many other political organisations, as well as issuing banning orders against various persons. Donald Woods was one of the banned persons and was effectively placed under house arrest.
Steve Biko had been involved in clandestine contacts with two outlawed liberation movements, the African National Congress (ANC) and the Pan Africanist Congress of Azania (PAC). Returning to his home one evening from a trip to Cape Town, Biko was arrested, imprisoned and mortally beaten. He was transported naked and manacled for 740 miles (1200 km) in the back of a police van to Pretoria, and died shortly after arriving at the police hospital there. James Kruger, the Minister of Justice, claimed that Biko died on a hunger strike. Speaking in Afrikaans, he said of Biko's death, "Dit laat my koud" ("It leaves me cold").
Woods went to the morgue with Biko's wife Ntsiki and photographed Biko's battered body. The photographs were later published in Woods's book, exposing the South African government's cover-up of the cause of Biko's death.
It became clear to Woods that his family was being targeted by the government, and he decided his family needed to leave South Africa to avoid the dangerous threats from the South African government. Woods and friends Donald Card and Father Kani devised a plan for him to be smuggled out of his house. Disguised as an Anglican priest, Woods hitchhiked 300 miles (480 km) before attempting to cross the Tele river. However, owing to days of steady rain the river had flooded, leaving him to resort to crossing the river at a border post using a fake passport. He made it undetected by South African Government officials to Lesotho where his family joined him shortly thereafter when prompted by a prearranged telephone call once he arrived in Lesotho. With the help of the British High Commission (in Maseru) and from the Lesotho Government, they flew despite threats from the South African Government to shoot down the plane over South African territory, via Botswana to London where they were granted political asylum.
After arriving in London, Woods became an active spokesman against apartheid. Acting upon the advice of Oliver Tambo, the President of the ANC, Woods became a passionate advocate of nations imposing sanctions against South Africa. He toured the United States campaigning for sanctions against apartheid. The trip included a three hour session, arranged by President Jimmy Carter, to address officials in the U.S. Department of State. Woods also spoke at a session of the United Nations Security Council in 1978.
Director Richard Attenborough decided to make a film, titled Cry Freedom, about Woods and Steve Biko, based upon the books which Woods had written. Donald and Wendy Woods became very involved in the project, working closely with actors and crew. Woods was portrayed by American actor Kevin Kline who became friends with Woods and his wife and family during the filming. The friendship continued until Woods's death in 2001.
On February 11, 1990, Nelson Mandela was released from prison after serving twenty-seven years on Robben Island. That Easter, Mandela came to London to attend a concert at Wembley Stadium to thank the anti-apartheid Movement and the British people for all their years of campaigning against apartheid. Woods gave Mandela a tie in the black, green and gold colours of the African National Congress to celebrate the event. On Easter Sunday, Mandela phoned to thank Woods's family for the tie and said that he would wear it at the concert the next day, which he did. Woods stood throughout the phone call.
Woods returned to South Africa in 1994 to support the fundraising efforts for the ANC election fund. His son Dillon was one of the organizers of the fundraising appeal in the United Kingdom. On April 27, 1994, Woods went to vote at the City Hall in Johannesburg. A cheering crowd took him to the head of the queue, giving him the place of honour so that he could be one of the first to vote in the new South Africa. Following the election, Donald worked for the Institute for the Advancement of Journalism in Johannesburg.
On September 9, 1997, on the twentieth anniversary of the death of Steve Biko, Woods was present in East London when a statue of Biko was unveiled by Nelson Mandela and the bridge across the Buffalo River was renamed the "Biko Bridge". Woods also gave his support to the Action for Southern Africa event in Islington, London honouring Biko, helping to secure messages from Ntsiki Biko, Mamphela Ramphele (then the Vice Chancellor of the University of Cape Town) and Mandela.
In the last year of his life, Donald gave his name to support the appeal to raise funds to erect a statue of Nelson Mandela in Trafalgar Square outside the South African High Commission, where anti-apartheid campaigners had demonstrated during the period of the apartheid regime. He was also awarded an Order of the British Empire.
Woods died of cancer on August 19, 2001.
A nine-foot (3 m) high bronze statue of Mandela was eventually erected on nearby Parliament Square, Westminster City Council having objected to its erection on Trafalgar Square, because of space considerations. It was unveiled by the British Prime Minister, Gordon Brown, on August 29, 2007, in the presence of Woods's widow, Wendy, and the former British actor and longtime friend of Woods, Lord Attenborough.