Donegal Town is over 2000 years old, making it one of the oldest in Ireland. It has a population of around 2500 and is located at the mouth of the River Eske, surrounded by the Bluestack Mountains in southwest County Donegal and at the convergence of three major traffic routes from Ballybofey, Killybegs and Ballyshannon. The town is situated at the intersection of the N15 National Primary road (from Sligo to Ballybofey) and the N56 National Secondary road, which services the western portion of the County. Donegal town is the fifth largest town in the County. Its central location has ensured its development into the thriving commercial centre that it is today. Despite being its namesake - Donegal town is not the county town (capital) of County Donegal. (The town of Lifford is.) Letterkenny is the largest town in the county.

Donegal Town was the seat of the O'Donnell's until the 17^th Century. The remains of their stronghold "Donegal Castle" have been restored. Situated in the centre of the town, the Castle was built by the O'Donnell chieftain in the 15^th century.

The O’Donnells were noted for their patronage of the church and learning. The Chieftains were always inaugurated head of the clan at a simple ceremony held on Doon Rock at Kilmacrennan. The Chief, or King, was inaugurated by one of the nobles of the clan presenting him with a straight white wand saying, "Receive the sovereignty of this county and preserve equal and impartial justice in every part of its dominions." The white wand was to remind him that he should be unbiased in his judgments and upright in his actions. His cousin Niall Garbh O’Donnell did not subscribe to these high sentiments and betrayed the family by throwing in his lot with the English. However, he became reconciled with his clan and was in fact the last Chieftain of Tirconaill. He was inaugurated at Doon in 1603. Ironically he was imprisoned by his one time friends the English and died in the tower of London in 1621.

The last great battle in which the O’Donnells were involved was the Battle of Kinsale in 1601 where they were badly defeated. Red Hugh went to Spain to seek help to resume the fight but he died there. Other Chieftains, including the O’Donnells and O’Neills were forced into exile. This became known as the “Flight of the Earls.” Before departing from Rathmullan on 14 September 1607, they partially destroyed the castle to prevent the English using it.

After the Flight of the Earls in 1607, Donegal Castle and its lands were given to an English Captain, Basil Brooke, as part of the Plantation of Ulster. Brooke carried out major reconstruction work and added a wing to the castle in the Jacobian style. The current plan of the town was also layed out including an attractive town square or "Diamond."

The Franciscans were brought to Donegal by Hugh O’Donnell and his wife Lady Nuala. It was at her request that they set up a community here. They contributed greatly to the spiritual needs of the area. It was here that Brother Michael O’Cleary with Peregrine O’Cleary, Peregrine O’Duignean and Fearfasa O’Maolconry worked on their famous “Annals of The Four Masters,” which is a full account of Gaelic Ireland since what they took to be its birth (2958 BC) until just after the Flight of the Earls (1616 AD). It took several years to compile, but was actually written up from 1632 to 1636.

The town is home to the regional newspaper Donegal Democrat and the more local newspaper The Donegal Times. Ocean FM, an independent regional radio station, has one of its three studios in the town, which broadcasts to most of south county Donegal.

Evidence of the Irish Famine still exists in Donegal, including a Workhouse, whose buildings are now part of the local hospital, and a famine grave.