The ruins of the Franciscan friary founded by the O'Donnells in 1474 stand at the edge of Donegal Bay, a short walk from the castle. The site is atmospheric rather than architecturally remarkable — most of the walls have collapsed to foundation level, and what survives is a section of the choir, some carved stonework, and the overall footprint of the cloister. The location beside the water, with views across the bay, makes it a pleasant place to linger.
The friary's historical importance is considerable: it was here that the monks who compiled the Annals of the Four Masters were based, though by the time they did the work the friars had been expelled and worked in the surrounding countryside. A memorial to the four masters — Michael O'Clery and his three collaborators — stands on the Diamond in the town centre. The connection between the friary and the great chronicle of Irish history gives the ruins a resonance that the surviving architecture alone would not justify.