Allan MacDonald was born in Fort William, Scotland, the son of a tavern keeper, and was descended from the MacDonalds of Keppoch. Prior to entering seminary, this future Gaelic scholar spoke only English. He was educated at the Scottish College of San Ambrosio in Valladolid, Spain. He was ordained to the priesthood at Glasgow by Bishop Eyre on 9 July 1884. He served as a priest in Oban before being assigned to Daliburgh, South Uist. The island of Eriskay, located across the bay, was also in his care. When sick calls on Eriskay were required, Father Allan would trudge down to the beach and light a bonfire as a signal to the Eriskay fisherman to come and ferry him across.

This era also saw the agitation of the Crofter's Commission and the Highland Land League. Therefore, Father Allan was active in demanding greater rights for the impoverished tenant who were bulk of his parishioners. At the time, the island's government and school board were dominated by members of the Church of Scotland. Therefore, Father Allan also began urging his parishioners to vote against the candidates of the landlord. This was a task which required great tact and, according to John Lorne Campbell, it is very telling that the Protestants of South Uist still speak very highly of Father Allan.

However, his health was broken in an epidemic during which Father Allan tirelessly provided the Sacraments to the dying. In order to assist his recovery, Father Allan was assigned to Eriskay which he immortalized in his poem, Eilein na h'Òige (Isle of Youth). He swiftly earned the love of his parishioners and oversaw the construction of a new church and rectory, both of which still stand on Eriskay. Although he died of pneumonia in 1905, Maighstir Ailein is still fondly remembered on both South Uist and Eriskay.

Father Allan began collecting folklore when he was assigned to Oban shortly after his ordination. With the assistance of a parishioner from the Isle of Lewis, Father Allan collected several Pre-Reformation liturgical hymns in Scottish Gaelic. He supplemented these with several of his own compositions, which were subsequently used in South Uist and Eriskay until the aftermath of Vatican II.

Father Allan, a lifelong admirer of the Jacobite movement, was an expert in the history of the uprising in 1745. His manuscripts are still preserved and, although unpublished, remain a rich source of Highland folklore and history.

Father Allan's poetry is mainly religious in nature, as would be expected from one of his calling. He composed hymns and verse in honour of the Blessed Virgin, the Christ Child, and the Eucharist. However, several secular poems and songs were also composed by him. In some of these, Father Allan praises the beauty of Eriskay and its people. In his verse drama, The Old Wives' Parliament, he lampooned the gossiping of his female parishioners. In, The Campbell Wedding, a poem composed for the marriage of his housekeeper, Father Allan irreverently skewered the Campbells over the Massacre of Glencoe and for siding against the House of Stuart during the Jacobite wars.

Father Allan's secular verse, however, was written for his own amusement and, likely, was never meant to see publication. A bilingual anthology of the priest's Gaelic verse, both religious and secular, was edited by Ronald Black. It was published in 2002 by Mungo Books, the Scottish imprint of Saint Austin Press.

Detailed research about Father Allan's life was collected by John Lorne Campbell and is housed at Canna, Scotland. In addition, South Uist vocalist Kathleen MacInnes performed Father Allan's Marian hymn Reul Alainn a Chuain on her 2006 album Summer Dawn.