Macdonald was born in Glasgow, Scotland. Her mother was a garment industry sales executive. Her parents divorced when she was young. She and her younger brother were raised by her mother on a council estate in the town of Newton Mearns. Macdonald attended Eastwood High School. Her family moved around frequently when she was a child, partially due to poverty.

Macdonald moved away from home when she was 17 years old. She took a college course in modern studies while living with a friend in Glasgow, but she soon dropped out of the class. Macdonald expressed interest in entering a drama school but never did, fearing she would not fit in because of her shyness.

Macdonald's career began while working as a barmaid. She saw a leaflet advertising an open casting session for what would become the movie Trainspotting, in which she played the part of Dianne, the underage seductress to Ewan McGregor's Renton.

Other roles include a reporter in The Hitchhiker's Guide to the Galaxy and an actress playing Peter Pan in Finding Neverland. She also had a big role in Robert Altman's British period piece Gosford Park, where she played a maid.

On television, her highest-profile roles have been in two BBC dramas, the Paul Abbott serial State of Play (2003) and the one-off Richard Curtis piece The Girl in the Café (2005). Both of these were directed by David Yates, and both also starred Bill Nighy. For her performance in The Girl in the Café, Macdonald was nominated for a Golden Globe in 2006, and won an Emmy.

Macdonald starred in the 2005 film Nanny McPhee, as the scullery maid Evangeline, and A Cock and Bull Story, where she plays the girlfriend of actor Steve Coogan's onscreen alter ego.

In 2007, Macdonald was cast in the Coen Brothers' Academy Award Best-Picture-Winner No Country for Old Men, in which she played the wife of the film's protagonist. Macdonald's agent originally wasn't sure she was right for the part; and Macdonald is reported as having to "fight for the role".

Her persistence paid off though, as she was nominated for a BAFTA for best supporting actress. In 2008, she was cast in the role of doctor Paige Marshall in the film Choke, adapted by Clark Gregg from the 2001 Chuck Palahniuk novel.