The injury-plagued right-back was absent from the weekend's Premier League win over Leeds United due to a tight hamstring, as Ruben Loftus-Cheek took up wing-back duties in his place.
Chelsea managed to scrape a 1-0 victory against the Whites without James thanks to Wesley Fofana's header, and Graham Potter said before the game that the former's withdrawal was predominantly precautionary.
"Reece is feeling a bit of tightness [in his hamstring] which is sometimes understandable coming back from injury," Potter told Chelsea's media channels.
"We have been assessing him this week and feel it is too soon for the game today. There is a strong chance he will be available for Tuesday [against Borussia Dortmund] but this game comes too soon."
As reported by the Evening Standard, James was able to take part in training at Cobham on Monday morning as his side gear up for the visit of Dortmund to Stamford Bridge.
The England international has been restricted to just 16 appearances at club level during a disrupted 2022-23 season, scoring two goals and setting up two more in that time.
James was forced to miss the 2022 World Cup owing to a severe knee injury, and he only made a brief return against Bournemouth in December before entering the treatment room again.
However, the 23-year-old's return has eased Potter's fears on the right-hand side, where Cesar Azpilicueta has also been missing recently due to concussion protocol, having been hospitalised with a head injury from Chelsea's loss to Southampton on February 18.
The report adds that Azpilicueta was not in training with the team on Monday morning as he is slowly integrated back into action, but Chelsea received two further fitness boosts alongside James's anticipated comeback.
N'Golo Kante and Christian Pulisic were both in full training as they step up their recoveries from hamstring and knee problems respectively, but the former is unlikely to be considered for selection just yet given his lengthy absence.
Meanwhile, Pulisic will only make the bench at best against his former club, while Edouard Mendy, Thiago Silva, Armando Broja all remain absent with their long-term issues, and Mason Mount - who missed the win over Leeds with an abdominal problem - is suspended for the second leg.
A sublime solo goal from Karim Adeyemi propelled Dortmund to a 1-0 win at the Westfalenstadion three weeks ago, but the German striker is also out of the second leg through injury, having since sustained a thigh problem.
Fellow attacking starlet Youssoufa Moukoko is also sidelined alongside Mateu Morey and the suspended Julian Ryerson, but Donyell Malen and first-choice goalkeeper Gregor Kobel have both shaken off concerns to make the journey for the Bundesliga giants.