James now has the daunting task of filling the void left by David Seamans decision to retire from the game on Tuesday night.
"David Seaman is a hard act to follow but this is a great and exciting challenge for me," James told the club's official website.
"I don't envisage any problems settling in at City. I have worked with Kevin Keegan before with the England squad and know several of the lads from my days at Liverpool and West Ham.
"Everyone knows what a big club City is with fantastic facilities, great fans and great ambition.
"I am just pleased to be back in the Premiership and can't wait for my debut."