Donaldson, who has 21 home runs at the all-star break, defeated first baseman Anthony Rizzo of the Chicago Cubs 9-8 in the opening round of the new bracket format at Great American Ball Park.
Donaldson needed only three swings to hit his first homer. He then ran off a streak of six home runs in a row, all to left field.
Acquired last off-season from Oakland in the Brett Lawrie trade, Donaldson finished with nine homers in all, the longest measured at 465 feet.
Frazier followed up Prince Fielder's 13 long balls with 14 of his own that averaged 422 feet. The third baseman's longest drive was 455 feet.
The crowd loved Frazier's power, repeatedly chanting: "Let's Go Frazier!"
Frazier tied Fielder with four seconds left in his four-minute limit, then used the 30 seconds of bonus time from having at least two homers exceed 425 feet to get the win and move on.
Fielder, who won the 2009 and 2012 Derby, was attempting to match Ken Griffey Jr. for the all-time title lead with three. The Texas Rangers first baseman connected with a 435-homer on his first swing and his longest blast was 474 feet.