Macdonald, who earned the name 'Supermac' during his Newcastle playing days in the 1970s, insists Ashley's plans will outrage Magpies fans.
Ashley, who announced on Tuesday he was taking the club off the market after failing to find a buyer prepared to match his £80m asking price, wants to maximise the club's commercial revenues by selling off the name of the stadium to sponsors.
Controversial: Club owner Mike Ashley has taken Newcastle off the market but the naming rights at St James' Park are still up for grabs to the highest bidder
But ex-striker Macdonald, who also played for England and Arsenal, told the Daily Telegraph: 'If they thought they had got on the wrong side of the people of Tyneside then just wait and see what happens if they go through with their plans to re-name St James' Park because there will be an almighty uproar and outcry.
'It would upset people so much because it everyone's second home. That is how people feel about it. It has been St James' Park forever and a day and it should remain that way.
Difference of opinion: Malcolm Macdonald (left) and club owner Mike Ashley
'One or two things have gone through my head this morning about potential new names and I am absolutely horrified to think what it could be called.'
Macdonald has also questioned Ashley's decision to appoint Chris Hughton as Newcastle manager on an 18-month deal. The Magpies currently top the Championship by a point following their 2-1 win over Doncaster last weekend.
Sitting pretty: Marlon Harewood (right) clashes with Doncaster's Quinton Fortune during Newcastle's recent 2-1 win which kept them top of the Championship
He added: 'There have been very, very few examples of coaches successfully becoming managers.
'Chris Hughton has been in the game a very long time as a player and then a coach and has never shown any managerial desire beforehand.'
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Explore more:People:Marlon Harewood, Mike Ashley, Quinton FortunePlaces:Newcastle, United Kingdom, St James' Park