Daniel James was born on September 7, 1945, in Washington, D.C. He enlisted in the U.S. Air Force on May 27, 1963, and served on active duty from June 20, 1963, to May 16, 1964, and then entered the U.S. Air Force Academy on June 29, 1964. After a year at the academy, James attended the University of Arizona, where he received his bachelor's degree in psychology and his commission as a 2d Lt in the U.S. Air Force through the Air Force ROTC program on June 6, 1968. Lt James completed Undergraduate Pilot Training and was awarded his pilot wings at Williams AFB, Arizona, in June 1969, and then served as an O-1 Bird Dog Forward Air Controller at Cam Ranh Bay AB, South Vietnam, from June 1969 to August 1970. His next assignment was as an instructor pilot with the 82nd Student Squadron at Williams AFB from August 1970 to February 1973, followed by service on the staff at Headquarters U.S. Air Force in the Pentagon from February to December 1973. After completing F-4 Phantom II Combat Crew Training, he served at Udorn Royal Thai AFB, Thailand, from June 1974 to May 1975, and then served at Nellis AFB, Nevada, from May 1975 until he left active duty and joined the Texas Air National Guard on May 1, 1978. While serving in the Texas ANG, Gen James served with the 149th Tactical Fighter Group, 182nd Tactical Fighter Squadron, and 149th Tactical Fighter Wing at Kelly AFB, Texas, from September 1978 to November 1995, and then served as Adjutant General of the Texas National Guard in Austin, Texas, from November 1995 to June 2002. His final assignment was as Director of the Air National Guard at the Pentagon from June 2002 until his retirement from the Air Force on June 5, 2006.

His 1st (of 2) Distinguished Flying Cross Citation reads:

First Lieutenant Daniel James III distinguished himself by extraordinary achievement while participating in aerial flight as a Forward Air Controller near Hoai An, Republic of Vietnam on 26 March 1970. On that date, Lieutenant James flew more than five hours in support of a friendly unit who were in contact with hostile forces. Lieutenant James skillfully guided his unarmed aircraft low over the hostile forces successfully directing tactical air power against their positions and forcing them to withdraw with heavy casualties. The professional competence, aerial skill, and devotion to duty displayed by Lieutenant James reflect great credit upon himself and the United States Air Force.