Heskey, who retired from international football in the summer, began his career at the Foxes but MacDonald said he has a future at Villa Park.
"I've not had any talks with Leicester. I live quite close to Leicester so I know quite a few of the people there and there has been nothing at all," he said.
"I think Emile Heskey is a very good footballer. You don't play as often as he did for England if you are not a good player.
"In my opinion, he has been a top player for a long time. You don't play for Liverpool and win trophies if you are not a good player.
"Aston Villa need as many good players as they can and then to develop some other ones as well."
Heskey is not the only player being ruled out of a move to Leicester: George Burley, the Crystal Palace manager, has said Neil Danns will not be allowed to leave Selhurst Park.
Leicester have been involved in one transfer move though, signing the Wolves goalkeeper Carl Ikeme on loan for a month.
Portsmouth are on the brink of selling captain Marc Wilson, despite saying earlier in the week he is not for sale.
Stoke City are expected to pay £3million for the player, with Liam Lawrence possibly moving to Fratton Park as part of the deal.
"A deal is very close. If we get the deal we're after, it will be a very good one for this football club," the Pompey manager Steve Cotterill told BBC Radio Solent.
Norwich City have signed defender Leon Barnett on loan until January 4.