James Grover McDonald was born on November 29, 1886 in Coldwater, Ohio. His parents, Kenneth and Anna Dietrich McDonald, operated a hotel, and the family's five children worked alongside their parents. The family later moved to Albany, Indiana, to operate a second hotel, and there McDonald met Ruth Stafford, whom he would marry in 1915. The couple would have two daughters, Barbara Ann and Janet.

McDonald studied at Indiana University, earning an A.B. degree in 1909 and a master's in History, Political Science, and International Relations in 1910. He won a teaching fellowship in history at Harvard Graduate School and then returned to Indiana University in 1914 as assistant professor of history. He taught until 1918, with a break in 1915-1916 to visit Spain as a Harvard University traveling fellow. He also taught summer sessions in international affairs at the University of Georgia in 1916 and 1917.

At the recommendation of his Harvard advisors, McDonald moved to New York City and took a position with the Civil Service Reform Association, which was committed to ending government corruption. From 1919 to 1933, McDonald served as chairman of the Foreign Policy Association, an organization dedicated to educating the public about foreign affairs. McDonald presided over Foreign Policy Association Luncheons, which were broadcast over WEAF and NBC. During the late 1920s and early 1930s, he gave weekly talks on international relations over the same radio stations, speaking on current world events. McDonald traveled extensively and made trips to Germany nearly every year, experiencing Hitler's rise to power firsthand.

In 1933, McDonald became League of Nations High Commissioner for Refugees and was faced with the task of negotiating refugee possibilities with Germany prior to World War II. In a meeting with Hitler in 1933, he became aware of Nazi goals to exterminate the Jewish population. McDonald struggled to help Jews and other persecuted individuals leave Germany, but found that his ability was restrained by League policies. He was respected and admired for his efforts and was awarded the American Hebrew Medal for Promotion of Better Understanding between Christian and Jew in America.

In 1935, McDonald resigned from the position. In his resignation letter, he detailed the mistreatment of minorities in Germany and urged the League of Nations to take proactive measures not only to help refugees, but to recognize and address the problems in Germany that forced them to leave in the first place. The letter was widely circulated and was one of the first denouncements of the Nazi government by an international diplomat.

McDonald returned to New York, and from 1936 to1938 he worked on the editorial staff of the New York Times, specializing in editorials on international relations. In 1938 he returned to the problems of the refugees, serving as chairman of the President's Advisory Commission on Political Refugees. The Commission was involved mainly in working with the State Department to adapt immigration laws to the crisis in Germany. McDonald served on the Commission until 1945.

In 1946, McDonald served with the Anglo-American Committee of Inquiry on Palestine, a British and American committee charged with forming a policy on the admission of Jews into Palestine. McDonald traveled throughout the reason to hear the testimony of Jews and Palestinians, and became a strong supporter of unlimited immigration into Palestine by European refugees, and of the eventual creation of the state of Israel.

In 1948, President Truman asked McDonald to serve as a U.S. representative to Israel, and McDonald moved to the newly formed country along with his daughter, Barbara. The following year, he became the first U.S. ambassador to Israel and served for two years, working to forge a strong connection between the two countries during a period of upheaval. McDonald resigned as ambassador in 1951 and returned to the US, where he became chairman of the Advisory Council of the Development Corporation for Israel.

McDonald wrote about his personal experience as an ambassador in his book My Mission to Israel, published in 1951. His extensive diaries, now held by the U.S. Holocaust Memorial Museum in Washington, DC, have also been published in an annotated, multi-volume collection, The Diaries and Papers of James G. McDonald.

In addition to his long career in international affairs, McDonald was also a member of the Board of Education of the City of New York (1940-1942); president of the Brooklyn Institute of Arts and Sciences (1938-1942); and a member of the Harvard Club of New York.

James G. McDonald died in 1964.