James McCarthy was born on September 3, 1930, in Memphis, Tennessee. He was commissioned through the Air Force ROTC program at the Virginia Military Institute on May 27, 1952, and went on active duty beginning July 28, 1952. His first assignment was as an aircraft maintenance officer at Eglin AFB, Florida, from July 1952 to February 1953, followed by Undergraduate Pilot Training, receiving his pilot wings at Reese AFB, Texas, in January 1954. Lt McCarthy next completed B-29 Superfortress training at Mather AFB, California, and then served with the 3513th Flying Training Squadron and 3510th Combat Crew Training Wing at Randolph AFB, Texas, from May 1954 to February 1956. During this time he also served as an instructor in nuclear physics. After completing radar navigator's school for pilots, Capt McCarthy served as a B-47 Stratojet pilot and aircraft commander with the 67th Bomb Squadron at Lake Charles AFB (later renamed Chennault AFB), Louisiana, from September 1956 to May 1960. His next assignment was as a B-52 Stratofortress aircraft commander with the 341st Bomb Squadron of the 4038th Strategic Wing at Dow AFB, Maine, from May 1960 to October 1963, followed by service as aide-de-camp to the commander of 8th Air Force at Westover AFB, Massachusetts, from October 1963 to August 1964. Maj McCarthy attended Air Command and Staff College at Maxwell AFB, Alabama, from September 1964 to October 1965, and then deployed to Southeast Asia, where he served as a C-123 Provider pilot witht he 309th Air Commando Squadron at Tan Son Nhut AB, South Vietnam, from October 1965 to October 1966. After serving a tour with Headquarters U.S. Air Force in the Pentagon from November 1966 to May 1968, Col McCarthy returned to Southeast Asia and served as commander of the 1st Flight Detachment of the 1131st Special Activities Squadron in Saigon, and then assigned to the 15th Special Operations Squadron at Nha Trang AB, South Vietnam, from May 1968 to August 1969. He attended Army War College at Carlisle Barracks, Pennsylvania, from August 1969 to June 1970, and then served on the Joint Chiefs of Staff in the Pentagon from June 1970 to September 1971. Col McCarthy next served as deputy commander for operations with the 416th Bomb Wing at Griffiss AFB, New York, from September 1971 to April 1972, with additional duty as commander of the 4104th Air Refueling Squadron while deployed to Korat Royal Thai AFB, Thailand, during this time. He was vice commander of the 43rd Strategic Wing at Andersen AFB, Guam, from September to December 1972, and then served as commander of the wing from December 1972 to July 1974. During this time he was awarded the Air Force Cross for leading the largest B-52 raid in the history of Strategic Air Command against heavily defended targets in Hanoi during Operation Linebacker II in December 1972. His next assignment was as assistant deputy chief of staff for personnel with Headquarters Strategic Air Command at Offutt AFB, Nebraska, from July 1974 to May 1975, followed by service as commander of the 42nd Air Division at Blytheville AFB, Arkansas, from May 1975 to July 1978. Gen McCarthy's final assignment was as deputy for strategic, space and electronic programs with the Air Force Acquisition Logistics Division, Air Force Logistics Command, at Wright-Patterson AFB, Ohio, from August 1978 until his retirement from the Air Force on August 1, 1980.

His Air Force Cross Citation reads:

The President of the United States of America, authorized by Section 8742, Title 10, United States Code, awards the Air Force Cross to Colonel James R. McCarthy for extraordinary heroism in military operations against an opposing armed force as Airborne Mission Commander, 43rd Strategic Wing, near Hanoi, North Vietnam, on 26 December 1972. On that date, Colonel McCarthy commanded the largest force of B-52's ever assembled on a long-range bombing mission over sophisticated and complex air defenses. Applying his exceptional knowledge of aerial warfare tactics and through his personal courage and technical expertise, Colonel McCarthy led this mission through intense anti-aircraft fire and heavy salvos of surface-to-air missiles to deliver the ordnance of the entire force on assigned targets accurately without sustaining a single loss. Through his extraordinary heroism, superb airmanship, and aggressiveness in the face of the enemy, Colonel McCarthy reflected the highest credit upon himself and the United States Air Force.