Donahue was born and raised in Bristol, Connecticut, and graduated from Bristol Central High School in 1999. After high school, she attended New York University, where she earned a degree in sociology.
After a supporting role in the Western horror film The Burrowers (2008), Donahue was cast as the lead in The House of the Devil in 2009. She went on to play leading roles in The Last Godfather by Korean filmmaker Shim Hyung-rae, and in the independent film Live at the Foxes Den. In 2012 she appeared in The End of Love, which premiered at the Sundance Film Festival, and worked with Director Terrence Malick on Knight of Cups. In 2016 she appeared in the anthology horror film Holidays (2016), which premiered at Tribeca Film Festival in a segment directed by Anthony Scott Burns.