The north-westerners captured the Mary Quinn memorial cup with a hard-fought two-point victory against Munster champions Waterford, appearing in their first All-Ireland since the senior decider in 2000.
Donegal led by two points at half-time, 1-7 to 0-8, and stretched that lead to five less than two minutes after the restart when McMonagle rattled home the second of her brilliant goals.
McMonagle’s first, in the 22nd minute of the first half, was brilliantly finished with her left foot and she scored her second with her right.
One first half point from tight on the end-line was worth the admission fee alone and McMonagle went on to torment the Waterford defence.
Eilish Ward was denied by Waterford goalkeeper Aimée Jordan in the 14th minute, Niamh Hegarty shot wide soon after before McMonagle finally broke through the Déise resistance, after Hegarty had hit the post seconds earlier.
Hegarty went close again four minutes before half-time, after Geraldine McLaughlin had a goal ruled out.
An overworked Waterford defence had suffered an early blow when Gráinne Enright was sin-binned in the sixth minute but the damage was minor.
The star turn all through this game, however, was McMonagle, who also starred when Donegal won the Division 2 final against Kildare.
She bombed through for a sensational goal early in the second half, but despite going five points down, Waterford refused to wilt.
And a run of five unanswered points, with top-scorer Michelle Ryan on song from frees, hauled Waterford level at 0-13 to 2-7 by the 44th minute.
Donegal had gone 13 minutes on the clock without a score before McLaughlin popped over a 45th minute point from play before McMonagle, one with her left and then with her right, slotted over two points from play.
Donegal, 2-10 to 0-13 clear, had breathing space again having weathered the Waterford storm and while Jason Lynch’s team twice got back to within a single point, the Ulster standard-bearers held on to clinch a memorable league and championship double.
Scorers for Donegal: Y McMonagle 2-5, G McLaughlin 0-5 (3f), A McDonnell & G Houston 0-1 each.
Scorers for Waterford: M Ryan 0-8f, L Wall & S Ryan 0-2 each, G Enright, M McGrath, E Power, A Wall 0-1 each.
DONEGAL: R McClafferty; D Toner, D Foley, K Wilson; C Hegarty, M Herron, T McCafferty; A McDonnell, K Guthrie; G Houston, N Hegarty, K Feeney; E Ward, Y McMonagle, G McLaughlin.
Subs: N Stapleton for Foley (40), K Keeney for Houston (49), R Friel for Feeney (52).
WATERFORD: A Jordan; N Dunphy G Enright, L Hogan; L Ryan, M Foley, M Wall; M McGrath, E Power; G Kenneally, M Ryan, L Wall; M Delahunty, S Ryan, A Wall.
Subs: N Briggs for Delahunty (39), A Dunphy for M Wall (44).
Referee: D McEnery (Westmeath).