James' office had already been investigating the Trump Organization, but only for possible civil offenses. Officials announced the expansion on Tuesday night.
The New York investigation began in 2019 and is now working with the Manhattan district attorney's office, which was performing a wide-ranging inquiry into Trump's dealings with banks and insurance companies over the value of his properties.
James' office wrote to the Trump Organization recently to notify it that information collected as part of the civil case can now become a criminal investigation.
"We have informed the Trump Organization that our investigation into the organization is no longer purely civil in nature," Fabien Levy, a spokesman for James' office, told CNN.
"We are now actively investigating the Trump Organization in a criminal capacity, along with the Manhattan DA."
The U.S. Supreme Court in February allowed Manhattan District Attorney Cyrus Vance Jr. to view eight years of Trump's tax returns and financial records as a part of its criminal investigation into potential tax, insurance and bank fraud.
Former Trump attorney Michael Cohen told Congress in 2019 that Trump had inflated the value of assets to banks to get better loans and insurance, while undervaluing them to cut his tax liability. Vance's investigation has centered around Cohen's testimony.
Vance's investigation also looked into hush-money payments paid to women who say they had sexual affairs and tax write-offs Trump's business claimed on millions of dollars worth of consulting fees.
James scored a legal victory against Trump in 2019 when a judge told the then-president to pay $2 million to settle a civil lawsuit that said he used his charity foundation to support his 2016 presidential campaign.
The Trump Foundation had agreed to disband in December 2018 as part of the investigation.