The 21-year-old has expressed his delight in committing the next year of his career to the Super League outfit following a lengthy injury layoff due to a cruciate ligament injury.
"Its like starting all over again now," Donaldson told the club's official website. "I've done my knee twice but this is a clean slate. My body is feeling good and I can't wait to get back in training and try and put things right again.
"There was a few other options but there was nowhere else I wanted to be because I love Bradford. I love all the boys here and that's the main reason I wanted to stay."
Donaldson's previous contract expired at the end of last season.