Donaldson made three substitute appearances for City in 2002/03 - including a goalscoring debut at Port Vale in the LDV Trophy - but hasn't figured since. He also went to Harrogate on loan in that season, before similar spells at Scarborough and Halifax this term.
Manager John Reed told the Harrogate Advertiser: "We are delighted to have signed Clayton. He is someone we have been after for a while and I am sure he will prove to be quality player because he has exceptional pace."