The deal will see the 25-year-old remain at Scotstoun until at least the summer of 2022, becoming the 17th player to re-sign with the club for Danny Wilson's first full campaign in charge.
The 6'8" second-rower produced a series of impressive displays at the beginning of 2019/20, claiming McCrea Financial Services Warrior of the Month award for October.
"It feels great to be staying on," McDonald told glasgowwarriors.org.
"A couple of years ago I wasn't sure what was going to happen with me rugby-wise, so to now be going into my fourth year at the club is amazing.
"Glasgow's my hometown - the Warriors have been part of my life for a while now, and it's a privilege to be a part of something that means so much to the community and the city. It's a great place to play rugby; the coaches give you every opportunity to show what you can do, and it's a great bunch of lads to play rugby and hang about with.
"I had a really good start to the season and had a really good run of games - I probably played the best rugby I've ever played, so I want to pick up where I left of.
"I'm excited to get back out there. Danny's vision for the club is one I'm really excited about, and I can't wait to show what I can do on the pitch."
Head Coach Danny Wilson was pleased to secure the second-rower's services with the new deal, as preparations continue for August's double-header with Edinburgh at BT Murrayfield.
"I've been watching Kiran's development for a while now in my previous role with Scotland, and I've been really impressed by the strides he's taken in the last year or so," said the Glasgow boss.
"He had a tremendous start to the 2019/20 season and was in excellent form before his injury. He does some great work at the lineout and carries hard, and brings a real edge to the pack.
"His potential is very exciting - I know he can still develop even further, and I'm looking forward to working with him."