In the early days of Planxty he played a modified round-backed Greek bouzouki until he commissioned Peter Abnett to build a flat-backed version. This was widely copied, soon becoming known as the Irish Bouzouki, and is now one of the staple instruments in Irish music.

Dónal co-founded Mulligan Records and produced 17 albums for the label, among them all the Bothy Band albums, the early Frank Harte albums, and albums by Andy Irvine and Paul Brady. Since then he has produced tracks for and collaborated on albums with Clannad, Kate Bush, Mark Knopfler, and Baaba Maal, among others. He produced the internationally-acclaimed “Common Ground” album for EMI, featuring such artists as Elvis Costello, Bono, and Neil and Tim Finn. He continues his work in studio production, also occasionally composing music for theatre, television and film.

He received an Honorary Doctorate in music from Trinity College Dublin in 2008 and is a member of Aosdána.
He currently plays in ZoDoMo, with Zoe Conway and Máirtín O'Connor; in Usher's Island, with Andy Irvine, Paddy Glackin, Mike McGoldrick and John Doyle; and in Atlantic Arc, with Aidan O'Rourke, Pauline Scanlan, Jarlath Henderson, Padraig Rynne, Graham Henderson, Sharon Howley, Ewan Vernal, and Davie Ryan. He regularly performs as a duo with Andy Irvine and Paddy Glackin respectively.