The 21-year-old, who has signed a five-year contract, is Ole Gunnar Solskjaer’s first signing since he succeeded Jose Mourinho as manager.
Swansea academy graduate James scored five goals in 38 appearances during a breakthrough 2018-19 season.
“This is one of the best days of my life,” he said.
James, whose father Kevan died suddenly last month, started both of Wales’ recent Euro 2020 qualifying defeats by Croatia and Hungary.
He scored his first Wales goal on his competitive debut in a 1-0 win against Group E rivals Slovakia in March.
“This is an incredibly proud moment for me and my family. However, it is tinged with sadness that my father isn’t able to share this experience with us,” said James, who almost joined Leeds United in January
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