McDonagh is a Roman Catholic and is of Irish descent. McDonagh was educated at the Holy Cross Catholic Girls' School in New Malden and later studied Politics at the University of Essex.
She was a clerical officer for the DHSS between 1981–83, a receptionist at the Wandsworth Homeless Persons Unit from 1984–86, and a housing adviser from 1986–88. Prior to being elected to Parliament she worked as a Development Manager for Battersea Churches Housing Trust from 1988–97. She also served as a councillor on London Borough of Merton for Colliers Wood ward between 1982 and 1998, chairing the Housing Committee between 1990 and 1995 where she was instrumental in the rebuilding of Phipps Bridge Estate.
McDonagh was selected to stand in the 1997 election for Labour through an all-women shortlist.
She was first elected in 1997 on her third attempt, defeating the Conservative incumbent, Dame Angela Rumbold, who was her opponent in both the 1987 and 1992 General Elections.
After the 2001 election, Tony Blair offered McDonagh the position of Parliamentary Undersecretary of State for Communities, however she declined the offer and remained a backbencher. Later she was successful, along with Merton Council, in getting the Secretary of State for Health, Patricia Hewitt, to locate the new critical care hospital at St Helier near the southern edge of her constituency. This overturned a decision by local health chiefs to locate the hospital at a site in Sutton, a number of miles away from her constituency.
After the May 2005 General Election she served as PPS to Dr. John Reid while he served as Secretary of State for Defence and from May 2006 to June 2007 Secretary of State for the Home Department. She was appointed to the position of Assistant Whip on 28 June 2007 in the re-shuffle brought about by Gordon Brown becoming Prime Minister.
On 12 September 2008, McDonagh became the first member of the government to call for a leadership contest. McDonagh said "It's about time we let party members and people involved in the Labour Party and the wider community in on that debate" in a BBC interview.
In June 2015 McDonagh nominated Liz Kendall, considered the Blairite candidate, to be leader of the Labour Party
In December 2015, she was among the minority of Labour MP's who voted in favour of extending UK military airstrikes against ISIS into Syria, she has written that it was a decision "not easy to come to".
McDonagh chose to abstain on a vote called to stop support for Saudi Arabia’s then military campaign in Yemen. The vote was defeated by a majority of 90, but notably could have passed had 97 Labour MP's not abstained.
In April 2000, her office sent a party political questionnaire to 200 of her constituents using parliamentary resources; a spokesman for Ms McDonagh said it was a mistake. McDonagh promised to apologise and pay back the money.
In 2007, her expenditure on stationery and postage attracted criticism, being more than any other MP for postage from 2003 to 2006. In total her office spent £126,833 on postage alone in the four-year period, an average of almost £32,000 per year. When adding in stationery costs, the expenditure was close to £50,000 in both 2004–05 and 2006–07. A spokesman said the stationery had been used to contact constituents about significant local issues.
In October 2010 her mobile phone was stolen from her car. Although not implicated in the robbery itself, it became evident that The Sun newspaper had accessed the phone, including messages stored on it. She subsequently won substantial damages against the newspaper in March 2013.
McDonagh lives in her constituency in Colliers Wood with her sister Margaret, who was General Secretary of the Labour Party between 1998 and 2001 during Tony Blair's premiership.
She is Patron of Leap Forward Employment – a community interest company that finds work for adults with mental health issues.