James Otteson earned his bachelor of arts degree from the Program of Liberal Studies at the University of Notre Dame in 1990. His sophomore year was spent abroad studying at the Universität Innsbruck in Innsbruck, Austria.

After completing his undergraduate degree, he attended the University of Wisconsin–Milwaukee, earning an M.A. in philosophy in 1992. He then joined the philosophy department at the University of Chicago, receiving a Ph.D. in 1997.

Upon graduating from Chicago, he took a position in the philosophy department at the University of Alabama, where he began as an assistant professor, received tenure, and rose to become department chair. In 2007 he accepted a position as joint professor of philosophy and economics and director of the honors program at Yeshiva University in New York City. In 2013 he moved to Wake Forest University, and in 2020 he returned to his alma mater and joined the faculty at the University of Notre Dame.

He has held visiting scholar positions at the Social Philosophy and Policy Center, then located at Bowling Green State University; at the Centre for the Study of Scottish Philosophy, then located at the University of Aberdeen; at the Institute for Advanced Studies in Humanities at the University of Edinburgh; in the economics and philosophy departments at the University of Missouri-St. Louis; and in the government department at Georgetown University. He has also taught in the economics department at New York University.

Otteson lectures widely on Adam Smith, classical liberalism, political economy, business ethics, and related issues, including for The Fund for American Studies, the Adam Smith Society, the Acton Institute, the Institute for Humane Studies, and the Tikvah Fund.