The Independent MSP, who had also served as an MP and MSP for the Nationalists, was described by First Minister Alex Salmond as a luminous star in Scottish politics.
Inviting delegates at the SNP conference in Aberdeen to honour her with applause, he said: "I've been thinking about how best to recognise that contribution that Margo made to this party and this movement. And somehow a minute's silence isn't the Margo way. Let's give a resounding round of applause to the great contribution Margo MacDonald made to the SNP."
He added: "No star has burned more brightly and shone more luminously than that of Margo MacDonald."
Bringing the clapping to a halt, he joked: "Margo would say, 'See - there's Alex Salmond bringing my applause to an end.'"
The tribute came as delegates passed a motion marking the 80th anniversary of the formation of the SNP and honouring past activists "who tenaciously campaigned for Scotland's interests".
Introducing the motion, Mr Salmond said: "We are a highly successful political party but we are not an ordinary political party. We are part of a movement. The aim and ambition is the freedom and independence of our country."
The tribute to Ms MacDonald, who had been battling Parkinson's, came as her family attended a private service for her in Edinburgh.