Upon graduating college, Donahue became the tenth head coach of the Auburn Tigers football team beginning in 1904. His coaching career saw immediate success, as his first team went undefeated at 5–0. Donahue's Auburn teams won five Southern Intercollegiate Athletic Association titles, in 1904, 1910, 1913, 1914 and 1919. His 1913 and 1914 squads have been retroactively recognized as national champions by various selectors including Billingsley Report and the Howell Ratings. Donahue's 1913 and 1914 teams went undefeated, with the 1914 squad allowing zero points to be scored all year. From 1913 into 1915, Auburn went 22 consecutive games without a loss. Donahue's 1920 team averaged a then-school record 36.9 points per game. The 1922 team is considered one of the school's greatest.
In 18 seasons coaching football at Auburn, Donahue amassed a record of 106–35–5 and had three squads go undefeated with four more suffering only one loss. His .743 career winning percentage is the second highest in Auburn history, surpassing notable coaches including John Heisman, Ralph "Shug" Jordan, Pat Dye, Terry Bowden, and Tommy Tuberville.
Donahue also served as athletic director, basketball coach, baseball coach, track coach, and soccer coach while at Auburn. In 1905, Donahue initiated the school's first official varsity basketball team, which went 3–1–1, including victories over Georgia Tech and Tulane, a two-point loss to the Columbus (Georgia) All-Stars, and a tie with the Birmingham Athletic Club. Under Donahue, basketball practice was a contact sport; a former player once lamented, "He never bothered calling fouls--said it slowed up the game." In 1912, he coached Auburn's first soccer team. By the beginning of the 1915 season, Auburn was only playing athletic clubs and prep schools and had yet to participate in an intercollegiate match, due to a lack of soccer programs at other Southern colleges.
Donahue went on to become the seventeenth head football coach at LSU in 1923 and had a 23–19–3 record over five seasons before retiring from coaching after the 1927 season. He also served briefly as the head coach of the LSU Tigers baseball team (1925–1926), compiling a record of 15–15–3, and as the head men’s tennis coach at LSU (1946–1947), tallying a mark of 0–7.
^ abMichael Donahue (1912). C. E. Sauls; C. W. Shelverton; J. K. Newell; H. W. Grady; W. B. Nickerson, eds. "Glomerata" (Annual) 15. Auburn, AL: Alabama Polytechnic Institute: 230. Retrieved 21 March 2011.
^J. B. Overstreet; Carl Montgomery; Paul Bidez; Wilbur Littleton; Leonard Pearce; Victoria Steele, eds. (1915). "Glomerata" (Annual) 18. Auburn, AL: Alabama Polytechnic Institute: 192. Retrieved 22 March 2011.