Donald MacDougall was born on 26 October 1912, the son of Daniel Douglas MacDougall and Beatrice Amy Miller. He was educated at Kelvinside Academy, Glasgow; Shrewsbury School; and Balliol College, Oxford. He married Bridget Christabel Bartrum in 1937 (marriage dissolved, 1977), with whom he had one son and one daughter, and Laura Margaret Hall (née Linfoot) in 1977 (died 1995).

He began his career as Assistant Lecturer (later Lecturer) in Economics at Leeds University, 1936-9. He worked in the First Lord of the Admiralty's Statistical Branch, 1939-40, and the Prime Minister's Statistical Branch, 1940-5, as Chief Assistant, 1942-5. He advised on reparations and German industry and attended the Potsdam Conference, 1945. He was a fellow of Wadham College, Oxford, 1945-50; Economic Director, Organization for European Economic Co-operation, Paris, 1948-9; Nuffield Reader in International Economics, Oxford University, 1950-2; Chief Adviser, Prime Minister's Statistical Branch, 1951-3; fellow of Nuffield College, Oxford, 1952-64; Economic Director, National Economic Development Office, 1962-4; Director General, Department of Economic Affairs, 1964-8; Head of the Government Economic Service and Chief Economic Adviser to the Treasury, 1969-73; and Chief Economic Adviser, Confederation of British Industry, 1973-84. He was a member of the European Economic Community Study Groups on Economic and Monetary Union, 1974-5, and on the Role of Public Finance in European Integration, 1975-7, which resulted in the MacDougall Report, 1977.

He was awarded the OBE, 1942; the CBE, 1945; and a knighthood, 1953. He is an honorary fellow of Wadham College, Oxford, 1964-, Nuffield College, Oxford, 1967-, and Balliol College, Oxford, 1992-.

His publications include: "The World Dollar Problem" (1957); "The Fiscal System of Venezuela" (1959); "The Dollar Problem: a Reappraisal" (1960); "Studies in Political Economy" (1975); and "Don and Mandarin" (1987).

He died in March 2004.