We present a geometric approach to defining an algebra $\hat{\mathcal G}(M)$ (the Colombeau algebra) of generalized functions on a smooth manifold $M$ containing the space ${\mathcal D}'(M)$ of distributions on $M$. Based on differential calculus in convenient vector spaces we achieve an intrinsic construction of $\hat{\mathcal G}(M)$. $\hat{\mathcal G}(M)$ is a{\em differential} algebra, its elements possessing Lie derivatives with respect to arbitrary smooth vector fields. Moreover, we construct a canonical linear embedding of ${\mathcal D}'(M)$ into $\hat{\mathcal G}(M)$ that renders ${\mathcal C}^\infty (M)$ a faithful subalgebra of $\hat{\mathcal G}(M)$. Finally, it is shown that this embedding commutes with Lie derivatives. Thus $\hat{\mathcal G}(M)$ retains all the distinguishing properties of the local theory in a global context.

24 pages, LaTeX