Ms James, who was one of 21 Tory rebels booted out of the party after backing moves to hand MPs opposed to a no-deal Brexit control of Commons business, regained the Conservative whip last week.
But she has confirmed she will not contest the snap election, blaming rifts with her local Conservative party.
She said in her resignation letter: "I am fortunate to have considerable support in my constituency, but sadly the opposite is the case among too many members of the Stourbridge Conservative Association. I have therefore decided to stand down from Parliament."
Ms James - who was first elected in 2010 - told the Stourbridge News there was now a real "conflict" between her views and those of local voters, who voted 64% in favour of leaving the EU in 2016.
"I was very pleased to receive the whip back and I wanted to continue in parliament," she said.
"It was only after a period of reflection that I realised that I needed to bring the three-and-a-half year conflict between the result of the referendum in my constituency, and my own view of where the future interests of the country lie to a close."
Ms James twice voted for Theresa May's Brexit deal and backed Boris Johnson in a Commons vote on his own agreement last month.
Her resignation makes her the latest prominent female Conservative to announce she is quitting at the next election, with Cabinet minister Nicky Morgan, former work and pensions secretary Amber Rudd and employment minister Mims Davies announcing that they too will not stand in the 12 December snap poll.
Thanking Mr Johnson for the "conciliatory tone" he had shown in restoring the whip, Ms James added: "I trust in your One Nation outlook."
But she made clear that she had faced deep splits with her own local party.
"I was increasingly concerned about the drift of the party," she said.
"I realised this is the moment where I could break free of the Brexit mandate."
Ms James' departure kicks off the hunt for a new Conservative candidate in Stourbridge, where the outgoing MP currently enjoys a majority of more than 7,000 votes over Labour.