Liverpool and Manchester United both displayed an interest in signing the 26-year-old Colombia international recently, but the Bavarians were always in pole position to land the highly-rated attacking midfielder.
Despite scoring 11 goals in his final 32 Real Madrid appearances – 36 goals in 110 games in all – James was shown the door after falling from coach Zinedine Zidane’s grace.
Moving to the Allianz Arena last summer on a two-year loan deal, but such has James form been this season that Bayern are prepared to exercise their option to buy a season ahead of schedule.
The fee is already set at €40m, being part of the original deal to take Rodriquez to the Bundesliga champions from the Spanish capital.
While James has just five goals in 28 appearances, his nine assists are joint-top in the Bayern squad, tying with Joshua Kimmich and Thomas Mueller.
It caps off a good week for the Colombian. He played a starring role in his country’s 3 – 2 win over France, following that with a brace of assists and a goal in Bayern’s 6 – 0 drubbing of Borussia Dortmund at the weekend.