The town is named after William Donald, a Scottish pastoralist who was the first settler in the area in 1844. At the , Donald had a population of 1,472. replacing that of nearby Mount Jeffcott which had operated since 1860. The town grew steadily boosted by the
closer settlement of the surrounding countryside and the arrival of the railway in 1882.
Sir Albert Dunstan, Premier of Victoria 1935-43, was born in Donald in July 1882. On 26 September 2006, Donald was the scene of the Borung Highway collision in which seven people died. Donald is occasionally affected by floods. Major floods have occurred in
August 1909, 1918, 1956, 1975, 1992 and January 2011. The area also suffered a major drought period in
the 1990s and 2000s, significantly impacting the community which primarily relies on crop farming to survive. ==Traditional ownership==