He read Philosophy, Politics and Economics at St Edmund Hall, Oxford from 1974. During his time at Oxford he was convicted of supplying cannabis after sending 0.1 g of the drug through the post. He pleaded guilty, and was fined £75. He became the first pupil of barrister Helena Kennedy, was called to the Bar from the Inner Temple in July 1978 and became a Queen's Counsel in 1997. As a junior barrister he defended a number of terrorist suspects (both Provisional IRA and those from the Middle East), fraudsters and major drug dealers, he was also on the defence team for the Matrix Churchill trial. In the late 1990s, he was a co-founder of Matrix Chambers (a law firm specialising in Human Rights cases) with Cherie Booth and Tim Owen QC. In 2001 he became a recorder (a part time judge) in the Crown Court.
In August 2003 it was announced that Macdonald would succeed Sir David Calvert-Smith as DPP in October of that year. The appointment was immediately denounced by Opposition spokesmen as "rampant cronyism" and a "provocative appointment" due to Macdonald's business relationship with Cherie Booth (wife of then Prime Minister Tony Blair) and his lack of prosecution experience. Government officials, including both the Attorney General and Solicitor General defended the appointment as it had been made by an independent board consisting of First Civil Service Commissioner Baroness Prashar; Sir Hayden Phillips, Permanent Secretary at the Department for Constitutional Affairs; Sir David Omand, Permanent Secretary, Cabinet Office; and Sir Robin Auld, Lord Justice of Appeal. A few days after the announcement the press uncovered details of his earlier conviction, sparking fresh controversy. Macdonald also clashed with then Home Secretary, David Blunkett over plans for longer prison sentences, provoking further press coverage. Not all coverage was so negative, with a fellow lawyer, David Pannick QC, writing in The Times defending Macdonald's appointment, and attacking the tabloid campaign against him; Macdonald's predecessor also dismissed the relevance of the drugs offence; and a report in The Independent also found support for the appointment from within the legal system. A later leader in The Guardian was also broadly supportive of his record in office.
He was awarded a knighthood in the 2007 New Year Honours. He is due to retire as DPP in October 2008.