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Gordon MacDonald was born in Gwaenysgor, Flintshire, Wales, the son of Thomas and Ellen MacDonald. Although brought up in Lancashire where his father worked as a coalminer, he was a Welsh speaker. He left school to work in a collier at age 13 although he later won a scholarship to Ruskin College. In 1913 he married Mary Lewis of Blaenau Ffestiniog. The couple had two sons and one daughter.
He became active in local politics and the Miners' Federation of Great Britain before being elected to Parliament to represent Ince in 1929. He resigned from Parliament in 1942 to take up the post of Regional Controller for the Ministry of Fuel and Power for the Lancashire, Cheshire, and North Wales Region. In January 1946 he was appointed Governor of Newfoundland and Commander in Chief of Newfoundland and its Dependencies, and chairman of the unelected Commission of Government that governed the dominion. He oversaw two referendums in 1948 on the future status of Newfoundland and and led negotiations the terms of Newfoundland's confederation with Canada.
In 1949 he was appointed Paymaster-General and elevated to the House of Lords as Baron Macdonald of Gwaenysgor. In 1950 he lead of the British delegation to the Commonwealth Conference on Economic Aid to Countries of South East Asia held in Sydney, Australia and was a delegate to United Nations General Assembly at Lake Success, New York. He was appointed a Privy Counsellor in 1951. Following Labour's defeat in 1951 he became active is Welsh civic life as National Governor for Wales of the British Broadcasting Corporation from 1952 to 1960 and chairman of the Broadcasting Council for Wales from 1953 until his death. From 1952 to 1959 he was a member of the Colonial Development Corporation.