Figures from the world of politics and showbusiness paid tribute to the woman described as "the brightest light in the Scottish political sky".
Ms MacDonald - who was known throughout Scotland simply as Margo - died on April 4 at the age of age 70.
Edinburgh city centre was gridlocked as friends and political opponents made their way to the Assembly Hall on The Mound, which was the first home of the reconvened Scottish Parliament that she played a pivotal role in creating.
Margo was a Hibernian FC fanatic and fellow fans The Proclaimers sang their hit, which is played at the club's home games.
Actress and independence campaigner Elaine C Smith, best known as Mary Doll in TV show Rab C Nesbitt, delivered a comical eulogy.
Margo's husband Jim Sillars and her close friend Alex Neil, Scotland's Health Secretary, delivered moving tributes. Mr Neil summed up the feelings of everyone when he said: "The turnout today is testimony not just to the impact Margo had on our politics but her impact on our society.
"For the last 41 years, Margo MacDonald has been the flower of Scotland."
As well as First Minister Alex Salmond, other political figures included Better Together leader Alistair Darling, Scotland Office minister David Mundell, Lord McConnell and Presiding Officer Tricia Marwick.