James, who has won 34 caps and was part of Wales' World Cup squad in New Zealand last autumn, will move to the Aviva Premiership club from the Ospreys.
"I have been with the Ospreys since 2003, and feel that I need a new challenge to keep developing my career," said James, who has made a record 177 Ospreys appearances.
"Bath is a very ambitious club and I am excited by the prospect of being a part of that. The Aviva Premiership is one of the toughest leagues, and I can't wait to get started."
Bath chief executive Nick Blofeld added: "Paul is a very experienced prop with a lot to offer us, both in the scrum and around the field.
"He has a great attitude and is a tough customer who will add considerably to our team. We are very much looking forward to him joining us."
Bath earlier this week confirmed a new-look coaching team for next term that will be headed up by South African Gary Gold and also includes former London Irish coaches Toby Booth and Neal Hatley.