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Gareth Southgate and his side begin the delayed tournament against World Cup finalists Croatia on Sunday, and will have home advantage for a vast majority of the European Championship should they make it all the way.
The England boss has worked tirelessly to lift the burden of past failures from his squad, with that mentality evidenced at Russia 2018 as the squad reached a first World Cup semi-final since Italia 90.
And James - who won 53 England caps - says mentality and psychology will once again be vital.
"Definitely. I took on sports psychology back in 2000 and it completely transformed the way that I played the game, prepared for games," James told Standard Sport. "When I didn't do what I was supposed to do then the performances weren't at the level they should have been.
"I know Gareth is big into it. The backroom staff are well equipped to support players in that sense and it will, I think become the difference for England to be successful or not."
Mentality is also vital for a goalkeeper, when any mistake at this level could see a country's dreams shattered in a second.
England No1 Jordan Pickford revealed last week that he has seen the benefits of working with a sports psychologist this season.
The Everton keeper is Southgate's first-choice ‘keeper, but James believes in Dean Henderson and Sam Johnstone there is enough talent to ensure that Pickford isn't sitting quite as comfortably as before - something which should push him on to better performances.
"I like the idea that there isn't an out and out number one, no challenger," said James.
"As an England fan I'd be much happier and am much happier knowing that there is a definite challenge for the place, and the psychology behind it is that Gareth and his backroom staff and his team would get all the goalkeepers all the players into the right mental state to be challenging and accepting someone else and possibly taking the starting line-up."
David James teamed up with England and FA sponsors, LG Electronics, with an exclusive DJ set for fans to celebrate the squad announcement and launch of the England FA4 earbuds - available now from LG.com