McDonald, the son of former player and the club's current football manager Donald, will join the Kangaroos' VFL affiliate side Werribee Tigers instead of playing in the TAC Cup with the Oakleigh Chargers.
Under AFL rules, the classy half-back will only be allowed to train with the Kangaroos one day a week throughout next season, but can train with Werribee.
He will play for Vic Metro through the NAB AFL Under-18 Championships, where he starred this season and was named an All Australian as a bottom-ager.
"We had an approach from North Melbourne a couple of weeks ago to discuss Luke, and they let us know they wanted to try to reduce the number of coaches that might be involved with Luke who might be giving him direction in the next 12 months," Kevin Sheehan, the AFL's national talent manager, told AFL.com.au.
"And we felt that, given his football form this year, his level of physical maturity, and that he's finished year 12, that he be best served to play for Werribee."
McDonald joined North Melbourne on its high-altitude camp in Utah last week.
