And with British & Irish Lions Leigh Halfpenny and Shane Williams both sidelined through injury, Gatland has had to look outside his original selection to find a wing partner for Scarlets sensation George North.
James last played for Wales against England at the start of the 2010 RBS 6 Nations, but then walked out on the camp and has not figured since.
"Tom was injured when we named the squad at the start of the series, but he did well for the Blues against Ulster, scoring a try in a game they should have won. He has genuine pace and that along with size and physicality and some experience at this level are what we are going to need against New Zealand," said Gatland.
James is one of 10 changes in personnel from the starting line-up in the disappointing 16-16 draw with Fiji last week as Wales seek their first win of the month. Scarlets wing George North and Ospreys duo Lee Byrne (full back) and Adam Jones (prop) are the only players retained in their starting positions.
Ryan Jones and Dan Lydiate keep their places in the side, but switch positions in a back row re-shuffled to accommodate fit-again Blues flanker Sam Warburton on the openside. Warburton's return from injury is a major boost, as is that of his regional colleague Gethin Jenkins.
Jenkins, who had been suffering from a calf injury, slots into the front row to win his 76th cap alongside Scarlets and Wales captain Matthew Rees. He returns at hooker to make it a reunion for the 2009 British & Irish Lions front row unit.
"We were all disappointed last week when we made a number of changes which we thought we could cope with. We found out we couldn't, but we hope to be back firing on all cylinders this week," admitted Gatland.
It's all change in the second row with the pairing against both Australia (a 16-25 loss) and South Africa (a close fought 25-29 defeat) earlier in the series, Blues lock Bradley Davies and Osprey captain Alun Wyn Jones, reunited. Lions half backs Stephen Jones and Mike Phillips are recalled after also starting Wales' first two matches of the campaign.
Elsewhere in the backs the centre pairing of Tom Shanklin and James Hook is another that is re-united from the Springboks outing, although both players also faced the Wallabies, with Hook at full back on that occasion. On the bench Wales have opted for a five forwards and two backs.
WALES: Lee Byrne (Ospreys); George North (Scarlets), Tom Shanklin (Blues), James Hook (Ospreys), Tom James (BLues); Stephen Jones (Scarlets), Mike Phillips (Ospreys); Gethin Jenkins (Blues), Matthew Rees (Scarlets, captain), Adam Jones (Ospreys), Bradley Davies (Blues), Alun Wyn Jones (Ospreys), Dan Lydiate (Dragons), Sam Warburton (Blues), Ryan Jones (Ospreys)
Replacements: Huw Bennett (Ospreys), Paul James (Ospreys), Jonathan Thomas (Ospreys), Andy Powell (London Wasps), Martyn Williams (Blues), Richie Rees (Blues), Andrew Bishop (Ospreys)