The 6-foot-2 inch, 192-pound, 11-year veteran played for the Cincinnati Bengals last season, making four interceptions and 42 tackles.
He was a second-round draft pick by the Denver Broncos in 1996 out of LSU.
He has 436 tackles, one sack and 44 interceptions in his career.
"(The Patriots) told him how they felt he could contribute to their success," James' agent, Mark Bartelstein, told the Boston Globe. "They've had a great history, and Tory wanted to be a part of that. He likes the winning tradition of Coach Bill Belichick."
James has made at least four interceptions in each of the past six seasons.
Linebacker Adalius Thomas, tight end Kyle Brady and running back Sammy Morris have also signed as free agents with the Patriots during the off-season, as have wide receivers Donte Stallworth, Wes Welker and Kelley Washington.