Mr Donaghy is to become the new Regional Director eHealth and External Collaboration.
Health Minister Edwin Poots made the announcement on Thursday, after a number of measures were agreed at a board meeting.
He said the decision was reached by "mutual agreement" to enhance the strategic leadership in a "high priority area".
Mr Poots said steps were being taken to appoint a new interim medical director to the Trust.
Mr Donaghy said: "I am looking forward to taking on this new challenge. I have agreed to this course of action, and I am confident that the new team will have the support of all in the Trust in seeking to resolve the difficulties it has faced over many years.
"I believe they will benefit from the work that I and my colleagues in the Trust have been doing in difficult circumstances over my time in the Trust.
"The staff are rightly proud of the services throughout the Trust, and I want to acknowledge their clear commitment to improving emergency care waiting timesfor the benefit of patients."
These appointments are being made as part of a programme of intensive support that will be provided to the Trust to ensure the necessary turnaround is achieved in the interests of patient care.
Health Minister Edwin Poots
Dr Peter Flanagan agreed to take up the post of Associate Medical Director to support the interim director. He then plans to retire next year.
The Health Minister also announced the appointment of two senior executives to the Northern Trust.
Marty Hinds and Paul Cummings, joining on temporary secondment from the Public Health Agency and Health and Social Care Board respectively, will take up the posts of Senior Director of Turnaround and Senior Director of Corporate Management.
They have been recruited following emerging findings from the Turnaround and Support Team which was appointed by the minister last year to help the Trust improve performance.
It was established because of the minister's concerns, particularly about the lack of sufficient improvement in emergency department waiting times.
Last year Jim Stewart, was sacked as chairman of the Trust by the minister, the first time that a senior health manager has been removed from his post.
The Minister said: "My overriding concern is to ensure that the Trust can meet the needs of the population it serves, and can provide acceptable experiences for patients, safe, high quality services, and a resolution of the problem of long waiting in the Emergency Department.
"I remain committed to avoiding long waits at all the Emergency Departments in Northern Ireland."
The Minister continued: "I believe that Mary Hinds and Paul Cummings together have the skills necessary to deliver the changes required at the Trust and I am confident that they will ensure significant improvements are made.
"I want to reiterate my appreciation to all of the staff of the Northern Trust for the professionalism and continuing dedication in delivering services to their local community."
On behalf of the Turnaround and Support Team, Sue Page said: "We have worked closely with the staff of the Northern Trust over recent months and listened carefully to their views.
"We hope we have been helpful in identifying the deep seated issues that have affected the Trust for quite some time, and that we can continue to be of help in working towards solutions that will secure high quality and reliable services for the community.
"We have been greatly impressed by much of what we have seen and we believe that with the appropriate support and teamwork the necessary turnaround will be delivered."