McDonnell joined his former junior team, the Kitchener Rangers, as an assistant coach during the 1986–87 OHL season. Later that year, he replaced Tom Barrett as head coach. He won the Matt Leyden Trophy and CHL Coach of the Year Award in the 1988–89 OHL season. He reached the Memorial Cup for a second time; the first as a coach, in 1990 where he and the Rangers lost in the finals 4–3 in double overtime to the Oshawa Generals. He was coach of the Rangers for nine seasons before being relieved in the 1994–95 OHL season.