The two Brazilian goalkeepers will go head-to-head when Manchester City host Liverpool in a Premier League top-of-the-table clash on Sunday.
The two sides are separated by just one point going into the weekend's fixture.
The two goalkeepers lead the way in terms of clean sheets this season in the top flight with 17 shutouts each.
"My favourite two goalkeepers in the Premier League, absolutely," James, who played for both City and Liverpool, told Stats Perform.
"Even off the field, these two guys are fantastic people. I can admire them from the goalkeeping art, but when you've got wonderful people doing it, then it just adds another layer to it.
"They're very good friends as well, which makes it even more interesting, team-mates on the international scene, your mates off the field, and then you're competing in pretty much every tournament."
"If I had a favourite, it's very difficult because their attributes are different," he continued.
"When you look at Ederson, the guy who can kick the ball 90 metres, hardly ever kicks the ball 40 metres, and everything is pretty much played in his own half now.
"It's more a demonstration of the dominance of City and because of that dominance he's not actually being called upon so much.
"Whereas if you look at Allison, who's got the freedom to get an assist if he wants, but has been called upon time and again, this even going into the game on the weekend, you're looking at it and thinking well 'case history would argue that Allison has made more saves in the last two months, possibly in one game than Ederson has had to do'.
"So Allison's kind of winning at the moment because he's doing more but I wouldn't want to pick one as my ultimate favourite."
