James grew up in Little Rock, Arkansas, where he graduated from high school. He attended Princeton University where he graduated with honors in Physics. He enrolled in the Massachusetts Institute of Technology for graduate studies in aeronautical engineering and graduated in 1925. He also earned his pilot's wings through the Army Air Service Reserve.
He incorporated the McDonnell Aircraft Corp. in St. Louis, Mo. By the mid-1960s, McDonnell Aircraft Corp. was the largest employer in Missouri.
James worked as a pilot for different companies, but then on July 6, 1939, he incorporated the McDonnell Aircraft Corp. in St. Louis, Mo. Within the next 30 years, the company would become the leading producer of jet fighters and would build the first spacecraft to carry an American into orbit. In 1967, it expanded its operation by merging with the largest employer in California, the Douglas Aircraft Co. His nephew took over as CEO of McDonnell-Douglas Aircraft in 1972, but James remained chairman of the board until his death.
James Smith McDonnell received numerous awards and honorary degrees. He was remembered for his many civic duties, particularly his chairmanship of the United Nations Association of the United States. In 1958, the McDonnell Aircraft Corp. was the first organization in the world to celebrate United Nations Day as a paid holiday.