The 27 year old was recently freed by Rotherham and plans to train as a graphic designer in Yorkshire.
His dad Jim Craig, the Lisbon Lion told the Daily Record: "The lad has been through a really tough time and the fitness problems got to him in the end.
"He may not have achieved some of the things he craved in the game but no one can take away his four caps - which is three more than I managed."
James made his mark as a teenager by scoring a spate of tries in the European Cup for Glasgow before grabbing a hat-trick for Scotland A in their victory over Wales at Goldenacre in 1997.
He won the first of four full caps against world champions Australia but waited four years for his next Test outing.
After leaving Glasgow for Rotherham he underwent an unsuccessful operation to remove internal scar tissue from his thigh. He needed further surgery and his days with Rotherham came to an end when they were relegated last season.