Donegal started lively with points from Michael Murphy but the first goal of the game came shortly after from Cormac Costello.
Donegal came from three points behind twice in the first half to sit just a score off the hosts at the break.
In the second half Kevin McManamon who was on a yellow card was sent off for a challenge on Mark mc Hugh.
Donegal failed to make the numerical advantage count and when Jack mc Caffery went on a wonder run and scored a fantastic strike the game was out of Donegal's reach.
Michael Murphy was shown a black card in the closing minutes but on the plus side Neil mc Gee made his first appearance of the year.
Donegal go into the break with two points from two games and face Cork in their next challenge on Sunday 1st of March in Ballyshannon.
There will be reaction from Donegal manager Rory Gallagher on tomorrow's Sunday Sport.