The grandeur of the Blue Stack mountains and the rivers and loughs of the surrounding area gives the visitor almost unlimited opportunities to indulge in pursuits such as fishing, walking or climbing. The area is also popular with bikers.

The town's situation at the southern end of the county make it the ideal base for touring the rest of Donegal. From here some visitors will venture to the national park at Glenveagh National Park and its Castle, while others will journey to Kincasslagh, home of Daniel O'Donnell.

Donegal Town is dominated by its historic Abbey and Castle. At its centre, The Diamond, there stands a monument dedicated to the the four friars who compiled the Annals of the Four Masters in the 17th Century. This historical text records the early history of Ireland. The original text is now exhibited six miles south of Donegal Town in Ballintra in the Ballymagroarty Historical Centre. Donegal Castle stands beside the Diamond, overlooking the river Eske. Here was the seat of the O'Donnells, the ruling family in Donegal in the 15th Century. The castle is richly furnished and has an impressive display of Persian rugs and French tapestries. Guided historical tours of Donegal Town take place daily during the summer.

Donegal Town is also the main centre for the tweed industry in Ireland and is home to Magee of Donegal, renowned world wide makers of Donegal handwoven tweeds. Here, visitors can see demonstrations of the art of weaving and browse around the gift store which brims over with giftware such as glass, china, pottery, and many other richly crafted Irish products.