Alex Salmond led a motion of condolence at the Scottish Parliament, joined by leaders of Labour, Liberal Democrats, Conservatives and the Green and independent group.
Ms MacDonald, 70, who suffered from Parkinson's disease, was a former SNP politician but spent much of her Holyrood career as an independent member.
She was fondly remembered as a witty and engaging personality who stuck to her principles while offering sound advice to others - on issues as diverse as the constitution and what jewellery to wear.
The veteran politician championed "unpopular" and often controversial subjects such as the right to assisted suicide and the plight of prostitutes in the capital, which she represented as MSP for the Lothians.
Mr Salmond said: "She managed to be influential but also widely loved by politicians and people, but particularly by the people."
Labour leader Johann Lamont said: "She had strong views but it was clear that those views did not in themselves define her, they were an expression of the deeply held values which had shaped her life."
Conservative leader Ruth Davidson said: "Margo's passing leaves this parliament and the political life of this nation a more dull and monochrome place, because she lit it up."
LibDem leader Willie Rennie said: "She was trusted and authentic. Margo was able to tread that line between rebellion and credibility."
Ms MacDonald joined two former SNP members and Holyrood's two Green MSPs to form a parliamentary group which she dubbed the "Grindies".
Green leader Patrick Harvie said she was a fantastic source of "juicy" gossip on other politicians.
Tricia Marwick, presiding officer of parliament, said: "The way she coped with her long, painful illness inspired many, including me, and showed what bravery really was."
Ms MacDonald died at her home in Edinburgh.
A colourful celebration of her life will be held in the capital on Friday.