The 27-year-old fly-half has been left out of New Zealand's World Cup squad in place of Carter, who is considered one of the best players of his generation.
"I've been behind Dan for the past four years," he told BBC Radio Bristol. "It's really worn me down... once I knew my chances were going to be limited, it aided my decision."
"It was a huge call. It kept me up for lots of nights, tossing and turning on whether it's the right decision.. in the end I settled with it."
Donald has won 22 caps for the All Blacks.