Italy international Davide Zappacosta was allowed to leave Stamford Bridge for AS Roma this week because coach Frank Lampard wants to promote James.
The 19-year-old, who is working his way back to full fitness after an ankle injury, starred for Wigan on loan last term and was the subject of a number of bids over the summer, including from Crystal Palace.
But Chelsea rejected them all because Lampard regards James as another academy talent that is good enough to be part of his side having already selected Andreas Christensen, Mason Mount and Tammy Abraham this term.
James is set to compete with Azpilicueta for the right-back berth and the latter admits to being a huge admirer of the youngster ever since he began training with the first team during Antonio Conte’s reign.
Azpilicueta said: “I am here to help everybody and he is an amazing kid. He has a very good mentality.
"No one has any doubts about his talent on the pitch and hopefully he can be a very important player.
“When he (first) came (to train with the senior side) he was already used to the way we play. After he arrived, I was playing as a centre-back so he was training on the right next to me.
“It was easy for me to get close to him and help him with the movements and to get used to the way we play. The movements that the manager asks us to play.”
Chelsea have been heavily criticised in the past for not using their young players despite having the most successful academy in the country.
But things have changed due to a combination of the club being banned from making transfers until next year and Lampard willing to give them a chance.
Fikayo Tomori is also involved this term, while Ruben Loftus-Cheek and Callum Hudson-Odoi are going to return soon following Achilles tendon injuries.
It means a total of five English youngsters that have been brought through the academy will be part of the senior set-up.
Chelsea also boast a number of players in their junior ranks that represent England at youth level.
And Azpilicueta feels that the England national team will have a lot to thank Chelsea’s academy for.
When asked if England stand to benefit from the west London club’s work, he replied: “Yes sure. When you go to Under-17s, Under-19s, Under-20s, even Under-21s.... you see that we have English players from here represented there.
“When they won the Under-20 World Cup (in 2017), they had a few players from Chelsea. We have been doing very good work in the academy.
"We have players from everywhere and we have a strong base of English players, which is important.
“We have a lot of talents in Chelsea. I know that everyone is excited about the young players and the English players. I think Chelsea has been the most successful academy team.
“We are doing a very, very good job with the kids and now I think even more kids are getting promoted to the first team and that's what we maybe lacked a few years ago.”
Chelsea take on Norwich City at Carrow Road on Saturday looking for their first win of the season. Defender Antonio Rudiger is in line to feature having recovered from a knee injury.