James Spaulding was conceived as a result of a tryst between Phillip Spaulding and his ex-wife, Beth Raines. Stranded in the mountaintops of the island of San Cristobel , Phillip and Beth were certain that they were going to die and sought comfort in each other's arms. Luckily the pair were rescued and returned to their respective partners. As the pair tried to put their affair behind them, they were forced to deal with the fact that their young daughter, Lizzie, was dying of leukemia. When Beth discovered that she was pregnant, she begged Phillip to acknowledge the child. When he refused, for fear of losing his wife, Beth told everyone that her fiancé, Jim Lemay, was the father. Meanwhile, things looked grim for Lizzie and when it was discovered that Beth's unborn child could be a bone marrow match, Phillip confessed to all to Jim and demanded that labor be induced early. The baby was successfully delivered and his bone marrow was instrumental in saving Lizzie's life in the summer of 2000.

Though Phillip's wife, Harley, refused to forgive Phillip for his infidelity, Jim forgave Beth and agreed to raise the baby as his own. Sadly, Jim died in a fire on Christmas Eve. While Beth tried to move on with her life, Phillip remained a small part of James's life. However, in 2001, when Beth decided to marry the villainous Edmund Winslow, Phillip took matters into his own hands and filed for custody of both Lizzie and James. By the time summer rolled around, Beth realized the mistake she made with Edmund and she and Phillip reunited. Unfortunately, their reconciliation did not last for long and by 2003 the pair were separated and Phillip was expecting a child with Olivia Spencer. Unfortunately, Phillip's mental health took a drastic turn and by the end of the year he was in a catatonic state in Ravenwood Psychiatric Hospital. Though Phillip was released in 2005, he was still unstable and began acting erratically and vindictively. The situation escalated until finally Phillip decided to kidnap all of his children. In the end, Phillip was presumed dead and Beth married Phillip's father, Alan, in order to gain financial security. Afterwards, James was barely seen as the Spauldings went on with their tumultuous lives. However, in 2007, a young James briefly attended school in Springfield. Though slated to play the lead in the school Christmas pageant, he fell off of the bleachers and was replaced by Will Winslow. Later, James confided in Josh Lewis that he thought he'd been pushed.

Afterwards, James was sent to Lincoln Prep. In 2009, a teenaged James was pleasantly surprised to find a young female visitor in his dorm room. Though she didn't recognize him, James recognized her instantly as Jim Lemay's daughter, Daisy Lemay. While James flirted with the young brunette, his girlfriend entered the room and kissed him. Suddenly, Daisy introduced herself as his girlfriend. The girl stormed out and James thanked Daisy since he was looking for a reason to break up with her anyway. It was obvious that James was attracted to Daisy and he asked her to Towers for dinner. At Towers, she came face to face with the Spaulding family and finally realized who James really was. Meanwhile, Phillip had finally returned to Springfield and was facing criminal charges for the kidnapping of the children several years earlier. To the shock of the entire family, Phillip was pardoned by the government. James made no secret that he was responsible since he specifically dated the governor's daughter in order to secure the pardon.

Though he was instrumental in getting the charges dropped, James had no love for his father who he resented for disappearing. In James's mind, Lizzie was Phillip's favored child and James was only conceived as a means to save her life. Though Phillip tried to bond with his son, James held nothing but disdain for Phillip and the entire Spaulding family. In the meantime, though Daisy claimed to be disinterested in James, she was obviously affected by his charm. Later, when James invited Daisy to a family trip to Universal Studios, she declined but changed her mind. Despite her reluctance, Daisy had a good time and continued to bond with James. On that same trip, Alan informed James that Phillip was responsible for the death of the man who recently had kidnapped Lizzie. Disgusted, James confronted Phillip. After accusing Phillip of doing anything to please Lizzie, James tried to test Phillip by asking him to kill Alan. Though initially afraid that Phillip just might do it, he didn't take the bait. Meanwhile, Phillip's presence at Universal was a result of his having escaped from Ravenwood Hospital when Alan vindictively had him committed for psychiatric testing. Knowing that Phillip escaped to prevent Alan from interfering in Lizzie's life, James again saved his father by telling the doctor that although Phillip escaped, he did it to help his father.

Later, James admitted to Daisy that in an attempt to be financially free from his family, he was initiated a Ponzi scheme. Unfortunately, the market crashed and James was forced to steal from some accounts to pay others. As if that weren't bad enough-Phillip new all about it. At the same time, Daisy discovered James's knack for drawing and arranged for him to use Reva's storage shed as an art studio. Soon after, Phillip overheard James talking about a business deal. Cornered, James was forced to admit that the Ponzi scheme to Phillip. James claimed that the situation began legitimately, however when he lost money he was forced to take money from some investors to pay others. Worse, James used Bill Lewis's name in order to woo clients. To bail James out, Phillip tried to divert money from his account but was blocked by Alan who had learned about the scheme. Confronted, a smug Alan informed Phillip that it might be good for James to face the consequences of his actions. Alan also hoped that Bill's name would be ruined as well. Meanwhile, Phillip told Beth about the trouble that James was in. At the same time, Bill was arrested. In order to save James and Bill, Phillip decided to tell the police that the scheme was all his idea.

However, when Phillip learned that James was ready to start another investment fund, he decided that James needed to be taught a lesson and turned him in to the SEC. James was subsequently arrested. Thanks to Phillip, James was refused bail and spent weeks in jail. Though Phillip tried to explain that he turned James in for his own good, James saw his action as a betrayal and became even more hostile towards Phillip. However, when the government prosecutor decided to go for the absolutely maximum punishment, Phillip had second thoughts and ultimately bribed the judge to guarantee that James would not do jail time. Instead the judge announced that almost all the charges were invalid and sentenced James one year of community service. When James learned that Phillip had bribed the judge, he branded him a hypocrite. Afterwards, Alan rescued James from his community service sentence by hiring another kid to complete James's sentence. Alan then took James under his wing. To show James the ins and outs of business, Alan took James along to his lunch meeting with investors. However, when James saw his waitress, Daisy, leave the restaurant with a cute waiter, he quickly ditched the meeting. Later, a hot-headed James punched Bill when he overheard Bill call him an arrogant kid. Upset, Lizzie forbade James to come to her upcoming wedding. Though Phillip tried to get James to apologize, James refused. However, thanks to Bill, Lizzie had a change of heart. Meanwhile, Phillip tried to mend his relationship with Alan and James by arranging for the men to go on a camping trip. However, when Alan and Phillip ended up arguing, James drove off and left them stranded.

As James bonded with his grandfather, his relationship with Daisy blossomed as well and he eventually asked her to go camping with him. Daisy agreed and the pair ultimately made love at the camp site. When Alan voiced his disapproval of James' relationship with Daisy, James made it clear that while he would support his grandfather, he didn't want him running his life. Not long after, at Cedars hospital, Phillip informed the family that he was dying. Suddenly, all of his issues with Phillip washed away and an upset James stormed out in anger and trashed the first office he went in. As he was cleaning up, he stumbled upon Phillip's file which indicated that there was a potential cure for his condition. In front of the rest of the family, James confronted Phillip's doctor, Ed, about the cure. Ed explained that it was an extremely risky procedure that involved a transfusion of bone marrow from a donor. Though Phillip was adamantly against it, both James and Lizzie demanded to be tested. Though James turned out to be a match, Phillip refused to let him risk his life on an experimental procedure. At the same time, Alan was found to be a match as well and convinced Phillip to let him help. That decision disappointed James as he couldn't understand why Phillip would allow Alan to risk his life but not him. Luckily, the procedure worked and Phillip was cured. Though Alan seemed to go through it alright, the procedure must have put a strain on his heart and Alan died of a heart attack. After finding out about Alan's death at Company, James rushed home and broke down in Phillip's arms.

Meanwhile, Daisy had been accepted at Berkley University in California. With James' encouragement, she accepted. One year later, their relationship must have been going strong since he paid her a visit in California.