Born in Moosomin, Saskatchewan (at the time in the Northwest Territories), McNaughton studied engineering at McGill University in Montreal. He enlisted in the militia in 1909 and went to Europe with the Canadian Expeditionary Force at the outbreak of World War I in 1914. While there helped make advances in the science of artillery, and was wounded twice. In 1920 he enlisted in the regular army and became chief of the general staff in 1929. In 1935 he became president of the National Research Council of Canada.
In 1939 he led the Canadian army into World War II, but despite his scientific capabilities he was also partially responsible for the disastrous Dieppe Raid in 1942. The British generals frequently criticized him, and his support for voluntary enlistment rather than conscription led to conflict with James Ralston, the Minister of National Defence. McNaughton resigned his command in 1943.
Because of his support for a volunteer army, McNaughton remained friendly with Prime Minister William Lyon Mackenzie King, who wanted to make him the first Canadian-born Governor General of Canada. Instead, McNaughton became Minister of National Defence when Ralston was forced to resign after the Conscription Crisis of 1944, as King did all he could to avoid introduction conscription. McNaughton was soon pressured into calling for conscription despite King's wishes, a popular move for some Canadians but an equally unpopular one for many others. McNaughton was unable to win a seat in Parliament and resigned in 1945.
After the war he served on the Atomic Energy Commission of the United Nations, as well as many other international committees, until his death in 1966.