James has been at Chelsea since the age of six and his time in the first team has seen him win the UEFA Champions League, UEFA Super Cup and FIFA Club World Cup.
The 23-year-old will replace Cesar Azpilicueta in the role after the Spaniard left Stamford Bridge this summer following 11 years of dedicated service.
Ben Chilwell will act as vice-captain to James.
New Chelsea head coach Mauricio Pochettino told the official website: "This is a decision taken by me and the club. We are very pleased Reece will captain the side this season.
"He leads by example and his attitude and dedication to Chelsea has been clear throughout pre-season. He proudly wore the armband during our summer tour and will take up the challenge of leading our squad with his own approach and ideas."
Meanwhile, James added: "I'm so happy to take on the role and responsibility.
"I know I've got big shoes to fill because we have had huge captains here in the past, but I am excited.
"I have been at Chelsea pretty much my whole life. I started here when I was six and to come through the academy is tough. But to go on and become captain, it's a great feeling for me and my family."
James will begin his time as Chelsea captain in their Premier League opener against Liverpool this weekend.
