The former North Shields and Blyth AFC boss, who had most recently been at Seaham Red Star, re-joins the Highwaymen after spending three years at the club from 2011-2014.
After informing Red Star of his intention to move to Craik Park, the coach will help form a management team including manager Nick Gray and assistant Craig Lynch.
“I spent three seasons at Morpeth as assistant manager and helped the club gain promotion into Division One of the Northern League and consolidate in the division in my final season,” he said.
“As a result, I’ve remained friends with the people at the club. I really enjoyed my time with the club and since then it has continued to grow in terms of ambition and infrastructure.”
Highwaymen boss Gray was delighted to bring McDonald in, where he will join a team sitting top of Evo-Stik East, with a five-point advantage.
“I’ve worked with Jon at Seaton Delavel and Morpeth and since he left, we have always kept close,” said Gray.
“He has done excellent jobs at where he’s been and he has been very unfortunate with some of the outcomes. To me, he’s very knowledgeable, likeable, enthusiastic, committed, dedicated and, most importantly, trustworthy. I’m delighted to get him on board and can see him having a very long and bright future at Morpeth.”