The presenter felt it was "direct party-political interference" in the show.
He was "tempted to resign" over the 2007 incident but after consulting with friends he decided against the move, he reveals in his new autobiography Just Joe published this week.
Mr McDowell had been furious about a segment on Liveline a couple of days previously in which Finglas criminal John Daly, who has since been shot dead, called the programme from a cell in Portlaoise Prison using a mobile phone.
Joe knew there would be a reaction to the piece but he was "unprepared for the reaction of RTE management at the time".
Ian Noctor, the editor of current affairs in the station, approached the Liveline team in the radio centre cafe and "in a rather peremptory fashion" instructed Joe to come to his office.
"I asked him what the purpose of the meeting was; he told me it was about the 'Daly phone call'," he recounts in his book.
Mr Noctor informed him that Mr McDowell's office had been in contact and was "outraged" that RTE had allowed the call on air.
The former Progressive Democrats leader was demanding a right of reply.
The following day, the head of the prison service Brian Purcell refuted a claim by crime writer Paul Williams that mobile phones were tolerated in Portlaoise.
After the show, Joe was told that Mr McDowell would be on air in the studio at the start of the following day's programme and would not be taking phone calls.
"This was unprecedented on Liveline," Joe says, explaining that guests seldom if ever come into the studio and listener interaction is the "bedrock" of the show.
The following day, Mr McDowell "marched in" and stated the claims made about Portlaoise Prison "were totally untrue". "I was of the opinion that this was simply a party-political broadcast in the run-up to an election," Joe says.
Elsewhere in the book, Joe talks about how he met and fell in love with his wife June while both were students in Trinity College.
June, from Cabra in Dublin 7, helped the Ballyfermot native in his successful campaign to be elected president of Trinity Students' Union in 1979.
It was not until after the vote that they started dating and in 1989 they got married, going on to have triplets in 1995.
Just Joe by Joe Duffy is being published by Transworld Ireland