James Belushi was born in Chicago, Illinois, the son of Agnes B., a first-generation Albanian American who worked as a cashier, and Adam Belushi, an Albanian immigrant and restaurant operator. After graduating from Wheaton Central High School, Belushi attended the College of DuPage and graduated from Southern Illinois University with a degree in Speech and Theater Arts.

From 1977 to 1980 Belushi, like his older brother, John Belushi, worked with the Chicago theater group The Second City. During this period, Belushi made his television debut in the 1978's Who's Watching the Kids and also had a small part in Brian De Palma's The Fury. His first significant role was in Michael Mann's Thief (1981). After his elder brother John's death, from 1983 to 1985, he appeared on Saturday Night Live; he portrayed characters such as Hank Rippy from "Hello, Trudy!", and "That White Guy". Belushi also appears in the film Trading Places as a drunk man in a gorilla suit during a New Year's Eve party.

Belushi rose to greater prominence with his supporting roles in About Last Night..., Salvador, and Little Shop of Horrors (as Patrick Martin) which opened up opportunities for lead roles. He has starred in films including Real Men (1987), The Principal (1987), Red Heat (1988), Homer and Eddie, K-9 (1989) which starred a real life police dog from Kansas City, Missouri named Koton (played as "Jerry Lee" and was later killed in police action in 1991), Dimenticare Palermo (1989), Taking Care of Business (1990), Mr. Destiny (1990), Curly Sue (1991), Wild Palms (1993), Royce (1994), Race the Sun (1996), Retroactive (1997), Gang Related (1997), and Angel's Dance (1999).

His voice work includes The Mighty Ducks, Babes in Toyland, Gargoyles, Hey Arnold!, and the more recent Hoodwinked and The Wild. On January 4, 2001, Belushi appeared on the ER episode "Piece of Mind". The episode focused on both Dr. Mark Greene's life-or-death brain surgery in New York and Belushi's character, who had been in a car accident with his son in Chicago. Belushi's performance contributed to his reemergence in the public eye, and the following year he was cast as the titular role in ABC's According to Jim.

In 2003, Belushi and Dan Aykroydreleased the album Have Love, Will Travel, and participated in an accompanying tour. He also performs at various venues nationwide as Zee Blues in an updated version of The Blues Brothers. He had his first book released, Real Men Don't Apologize, Real Women Don't Sass Back, in May, 2006.