He was born near York, Upper Canada (now Toronto, Ontario). His parents were Daniel McDougall and Hannah Matthews.
He received his education at Victoria College in Cobourg, Upper Canada, and in 1847, began practising law as an attorney and solicitor in Upper Canada. In 1862, he was called to the Upper Canada Bar.
He was elected as a member of the legislative assembly in 1858 and served as Commissioner of Crown Lands and Provincial Secretary. He attended all three Confederation Conferences, and then served as Minister of Public Works in the Macdonald government.
McDougall was appointed Lieutenant Governor of Rupert's Land and the North-Western Territory in 1869. However, when he tried to enter that jurisdiction from the United States, he was turned back near the border by Louis Riel's insurgents before he could establish his authority at Fort Garry. Consequently, he resigned from office.