In December 2007, McDonald was named BBC Sportsound Player of the Year for his eight man-of-the-match performances throughout the 2006–07 season. In March 2007, after a £400,000 bid from Rangers had been rejected in January, Motherwell accepted an offer of £700,000 from McDonald's boyhood favourites Celtic, with McDonald moving to Celtic Park at the start of the 2007–08 season. McDonald made his competitive debut for Celtic in the first leg of the UEFA Champions League third qualifying-round match against Spartak Moscow at Luzhniki Stadium, assisting Paul Hartley for Celtic's goal as the game finished 1–1. His first goal for the club came in the second leg of the tie at Celtic Park. A mistake by Spartak defender Roman Shishkin allowed McDonald to slip in and hit the ball first time past Stipe Pletikosa. This match also ended 1–1, but Celtic won 4–3 on penalties. Just days later in an away league match against St Mirren, McDonald latched onto a long Gary Caldwell pass to lob Chris Smith from a tight angle and score his first SPL goal for the club. He followed that up with the winning goal in the final minute of their 2–1 UEFA Champions League group-stage win against A.C. Milan on 3 October and another last minute winner just days later at Gretna. In a pulsating clash with Old Firm rivals Rangers on 16 April 2008, McDonald set up his Dutch strike partner Jan Vennegoor of Hesselink for a last minute goal that kept Celtic in the 2007–08 SPL title race, before scoring a double and winning a penalty scored by Barry Robson in another vital 3–2 Old Firm victory eleven days later. At the end of the season, McDonald was rewarded with a new five-year deal at Parkhead and was nominated for SPL Player of the Year. He scored 25 goals in 36 league appearances in his first season at Celtic and was the top goalscorer during the 2007–08 season, beating the next highest goalscorer and strike partner Vennegoor of Hesselink by 10 goals. This breakthrough season included two hat-tricks; against Dundee United and former club Motherwell. In total, McDonald scored 31 times in his first season at Parkhead. McDonald wore the number 27 shirt in his first season with Celtic, but in July 2008 he was given number 7, which he also wore at Motherwell. After a sluggish start to the 2008–09 season, not scoring in any of the first four games, he opened his account against Motherwell, scoring Celtic's third goal in a 4–2 win at Fir Park.