The 29-year-old New Zealander joined the Aviva Premiership outfit in November 2011, shortly after kicking the winning penalty as the All Blacks beat France in the World Cup final.
The former Waikato man has gone on to make 31 appearances and score over 150 points for Bath, but he will depart this summer despite having a year left on his contract. He will join Mitsubishi Dynaboars.
Donald said: "I've had a great time with Bath, but feel it is time for a new challenge in a new league.
"I'd like to thank everyone at the club and all the Bath supporters for all the support during my time here, and I'm really looking forward to doing all I can to help us end this season on a high."
Head coach Gary Gold added: "Steve is a good footballer and is a great character to have around. He has brought a lot of experience to the squad in the last couple of years, and we wish him all the best of luck in Japan next season."
- Sports & Recreation