More than 2,000 fans of the singing sensation are expected to flock to Kincasslagh for the event next week.
The festival will feature a gala concert by the star and he will also lead a charity walk in the area.
But Donegal County Council have now thrown a spanner in the works by starting road works on the local R259 road which will last for six weeks.
Organisers and local businesses are fuming at the move which they say could not have come at a worse time.
Festival director, Celia Gallagher, said she does not think the county council appreciate what Daniel O’Donnell does for the area.
“Daniel O’Donnell gives up his free time and is doing so much for the area and yet it does not seem like the council appreciate all he does.
“We are talking about English bus drivers who do not know the area and they will have to contend with this.
“The timing simply could not have been worse,” she said.
Businesses are also up in arms at the roadworks.
Bartley Brennan, of Leo’s Tavern in Crolly, a brother of multi-millionare singer Enya, told Shaun Doherty of Highland Radio that he got absolutely no warning about the road closure.
“The first I heard about the road closure was when a customer came into the bar and mentioned it to me. That was the notice I got.
“We have a very short tourist season compared to operators down south and we have to make the most of it. If they put this work off until later in September then that would be a lot better.
“People are saying it is only a diversion but the reality is that the other roads cannot take such volumes of traffic including all the buses that will be here next week,” he said.
A spokesman for Donegal County Council said the work had been penciled in as it was weather–dependent.