Obama is tasking McDonald, a West Point graduate, with turning around an agency plagued by allegations of mismanagement and a coverup of long wait lists for treatment, with several patients dying in the process.
The political scandal last month led to the resignation of Eric Shinseki as Veterans Affairs secretary after a stellar military career.
While praising McDonald as a "strong leader," Republican House Speaker John Boehner stressed that "the next VA secretary can only succeed in implementing that type of change if his boss, the president, first commits to doing whatever it takes to give our veterans the world class health care system they deserve by articulating a vision for sweeping reform."
McDonald served for 33 years at Procter & Gamble, and his tenure there "prepares him well for a huge agency with management challenges in servicing more than eight million veterans a year," a White House official said.
At P&G, McDonald oversaw more than 120,000 employees of the company with operations around the world, selling products in more than 180 countries in more than 2.5 million stores and reaching more than 5 billion customers.
"McDonald's personal and professional history make him the perfect person to lead the Department of Veterans Affairs during this important time," the official added.
His father was an Army Air Corps World War II veteran, and McDonald graduated in the top two percent of his class at the prestigious West Point military academy.
McDonald served in the US Army for five years, achieving the rank of captain in the 82nd Airborne Division before joining P&G, starting with an entry-level job.
He held posts at many different levels at P&G, with different functions and in locations across the United States and around the world.
Senate Veterans Affairs Committee Chairman Bernie Sanders, an independent who caucuses with the Democrats, said he looks forward to meeting McDonald.
"The VA needs significantly improved transparency and accountability and it needs an increased number of doctors, nurses and other medical staff so that all eligible veterans get high-quality health care in a timely manner," he said in a statement.
His counterpart in the House, Jeff Miller, cautioned that if confirmed by the Senate, McDonald would inherit a VA "under a specter of corruption that may very well surpass anything in the history of American government."
"He'll need to root out the culture of dishonesty and fraud that has taken hold within the department and is contributing to all of its most pressing challenges," the Florida Republican representative added.
"Quite simply, those who created the VA scandal will need to be purged from the system."