The team announced the re-signing of James on Wednesday. Terms weren't released.
He was drafted early in the second round by Dallas in 2012. He has averaged 2.1 points and 2.3 rebounds in 76 career games, including 11 starts.
The former Air Force staff sergeant served three tours in Iraq, Afghanistan and Qatar.
Tyson Chandler will start at center after returning to Dallas in a trade with New York. The other centers are Greg Smith and Brandan Wright, who also plays forward.