James Frederick MacDonald was born on Seattle's First Hill on May 14, 1889. He later moved with his family to Bainbridge Island. After graduating from high school in 1908, MacDonald and his friend Claude Braden traveled the world, funding their way by presenting a slide show named "Picturesque America and Its Wonders."

Following his return from his travels, MacDonald attended Amherst College before transferring to the University of California, Berkeley for his junior year. After completing his junior year in 1912, MacDonald and his friend Harry Thomson traveled to Europe. MacDonald then returned to North America to tour the Pacific Northwest. After serving in World War I, MacDonald continued to travel and visited the Princess Louisa Inlet off the coast of British Columbia in 1919. He then returned to live in San Francisco, where he worked as a factory representative for his friend Claude Braden's jam business. He later worked in Nevada prospecting and assessing shell-marl in the Nevada desert.

Eight years after first seeing the Princess Louisa Inlet in 1919, MacDonald purchased 45 acres of the inlet in 1927. He lived on this property--first in a log cabin near Chatterbox Falls and later on a houseboat--until 1953, when he donated the land to the Princess Louisa International Society. The land was acquired by BC Parks in 1964, which had also acquired much of the land surrounding MacDonald's original donation in order to form the Princess Louisa Marine Provincial Park. One of the islands in the inlet was named MacDonald Island in the 1970s.