The 57-year-old father of three died at Sligo General Hospital on Saturday night after he was airlifted from the scene of the tragedy.
A 24-year-old man from Derry who got into difficulties with him was also taken to hospital but he was later released.
Gardai and emergency rescue services said the two men, who were friends, were diving near St John’s Point lighthouse when they got into difficulty.
They were on their second dive when they reached surface and they were suddenly hit by a freak wave.
Emergency services said there was no problem with the breathing equipment but it is believed the way the wave struck Rev Jones caused a serious problem.
He was assisted to shore by the 24-year-old diver and the Coast Guard Service from Killybegs and Bundoran lifeboat were alerted and raced to the scene.
As CPR was being administered on shore the Coast Guard helicopter 118 from Strandhill, Co. Sligo, was also sent to the scene.
The alert was raised at 4.30 pm on Saturday. Within six minutes the crew of the Bundoran Lifeboat was on their way in the water across Donegal Bay to St John’s Point which they reached at 4.50 pm.
An alert was also passed to other boats in the vicinity.
Killybegs Coast Guard and another vessel, Red Manta, were already at the scene when the Bundoran crew arrived.
Bundoran lifeboat, with the crew continuing to apply CPR, then transferred the victim to the nearby White Strand area where the man was transferred to an ambulance and driven a half-mile to the helicopter and airlifted to Sligo General Hospital.
Rev Jones was a qualified diving instructor who lived investigating the sea waters off Donegal.
He was 10 years in Donemana where the community was today stunned when they heard of the tragedy.