The former Manchester United and Leicester City star has agreed to move to The Racecourse until January initially.
Wrexham are looking to counter the loss of George Evans who has undergone surgery to repair damaged ankle ligaments while Andy Cannon and George Dobson are walking a disciplinary tightrope and are one booking away from a suspension.
James played for Bristol City last season but has been a free agent since leaving them in the summer.
He began his career in United’s youth set-up back in 2007, making several appearances for the Red Devils’ Under-18s before leaving for Leicester in 2012.
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Matty James has been drafted to Wrexham to provide cover for the side’s injury-hit midfield
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The Welsh club’s owners Rob McElhenny (left) and Ryan Reynolds (right) helped strike the deal
The 33-year old former England youth international had interest from other Championship clubs notably Coventry City and Leeds United but a deal failed to materialise.
However, it is understood clubs will monitor his return to action with high-flying Wrexham as they look to clinch promotion from League One.
They have lost some ground on leaders Birmingham City, whom they trail by four points having played a game more, but hope James can help add some extra quality and impetus to the squad going forward.
Wrexham are also still searching the free agent market for an emergency striker with Jack Marriott, out for four months, and now Steven Fletcher, leaving boss Phil Parkinson short on options up top.
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The 33-year-old has played for Championship clubs including Coventry, Bristol City and Leeds
Mail Sport understands that former Bolton Wanderers big man Jon Dadi Bodvarsson is a player that is of interest.
Wrexham left two free spots open in their registered squad with the EFL to offset potential late arrivals as free agents and Parkinson has had to move earlier than he hoped amid a flurry of long-term injuries.
