He accused the government of failing on its deficit target, debt target and welfare cap - while pledging more taxes, debt and borrowing.
"The verdict could not be clearer - the so-called long-term economic plan has failed," he said.
Mr Hammond said there were not enough high earners to fund Labour ambitions.
Single market access
Giving his response to Mr Hammond's first Autumn Statement as chancellor, Mr McDonnell said the government was "ill-prepared and ill-equipped" to face Brexit - "the greatest economic challenge of a generation".
"The chaotic Tory handling of Brexit threatens the future," he told MPs. "You must now do the right thing for British workers and businesses - you must insist on full, tariff-free access to the single market....
"If you stand up for British business and jobs in fighting for single market access, you will have our support."
Turning to the rest of the statement, Mr McDonnell claimed six million people were earning less than the living wage and accused the Conservatives of treating so-called Jams - those who are "just about managing" - as being an "electoral demographic", adding "to us they are our friends and the people we represent".
"If you really want to make a fair tax system as well, you can start by bringing back the 50p rate for the very richest in our country."
'Race to the bottom'
He said it was regrettable that the chancellor was still going ahead with some of the cuts to Universal Credits, accusing him of "betraying" working single parents who he claims are at least Â£2,300 worse off.
He called for additional support for the social care budget, stressing: "We now have 3.9 million people on NHS waiting lists ... Many of those are waiting in pain and they have got no relief today."
He described the scrapping of tenant and letting fees as "a victory for Labour campaigning", but said home ownership was still "a dream" for the under 25s because fewer houses had been built under the Conservatives since the 1920s.
He said the chancellor was "continuing a race to the bottom" on corporation tax, while continuing to cut public services and cut taxes for big businesses.
But in response, Mr Hammond said the top 1% of earners contribute 27% of the tax paid. "Unfortunately, there aren't enough of them to finance all your ambitions."
Chancellor Philip Hammond's spending plans "offer no hope for the future" after six "wasted" years, his Labour counterpart John McDonnell has claimed.