McDonald came out of the bedroom and made a comment about Mr Kahi's car being stolen by a friend.
"Next minute, I was flying through the air, hitting the sofa," the defendant said.
He said Mr Kahi had shoved him and he was "scared as hell ... freaked out".
"I was thinking at the time, he was going to grab something and deal to me ... just ... the reaction I got from him, from my comment, it seemed excessive. I don't know, I was scared of the guy," McDonald said.
He broke down in tears as he described grabbing his high-powered FX Monsoon air rifle that was lying on the floor.
"I just grabbed the f***ing thing and just dut, dut, dut, dut ... everywhere."
He said he dropped the gun in his bedroom before he ran from his house.
Earlier, McDonald told the court how he had rigged up a security system at his home near Botany Downs.
Cameras monitored the front driveway and backyard, and security beams covering the driveway alerted him to anyone approaching.
McDonald's security system also told him, via text message to his mobile phone, when the power to his property was cut.
He said he kept drugs and money at his home and on one occasion, Mr Kahi had walked in on him counting out $120,000 in $20 bills.
McDonald said he had had several break-ins and was planning on getting out of the methamphetamine scene.
He said he intended to shift from the home and had asked Mr Kahi to move out.
He said he had helped Mr Kahi to do this on the day of the shooting to make sure he didn't steal any of his gear.
But McDonald had become angry when Mr Kahi told him a woman he had been keen on was really only interested in his money and drugs.
He said he had left Mr Kahi at the house and driven around Auckland, before getting a text message from his security system to tell him the electricity had been cut to his property.
He returned home, parked around the corner and approached the house in darkness.
McDonald said he went inside and found that Mr Kahi had gone.
"I thought earlier on in the day ... what's the point [of living]?"
He wept as he recalled reaching for his air rifle and thinking, "How easy it would be to lie there and blow my brains out". The only reason he did not pull the trigger was that his cat Tigger got up on his lap.
The trial continues.