Lancaster came from Basingstoke in Hampshire. In his early life, he fought and traded in Portugal. On the 10th of April 1591 he started from Plymouth, with Raymond and Foxcroft, on his first great voyage to the East Indies; this fleet of three ships is the earliest of English oversea Indian expeditions. Reaching Table Bay (August 1 1591), and losing one ship off Cape Corrientes on the 12th of September, the squadron rested and refitted at Zanzibar (February 1592), rounded Cape Comorin the following May, and reached the Malay Peninsula in June. During this voyage, Lancaster's ships attacked for plunder every ship they encountered.
After a later crossing to Ceylon, the crews insisted on returning home. The return voyage was disastrous with only twenty-five officers and men surviving to reach England in May 1594. Lancaster himself reached Rye on May 24 1594; in the same year he led a military expedition against Pernambuco, without much success; but his Indian voyage, like Ralph Fitchs overland explorations and trading, was an important factor in the foundation of the East India Company. In 1600 he was given command of the company's first fleet (which sailed from Torbay towards the end of April 1601); his vessel was the Red Dragon. He was also accredited as Queen Elizabeth's special envoy to various Eastern potentates. Going by the Cape of Good Hope (1st of November 1601) Lancaster visited the Nicobars (from the 9th of April 1602), Aceh and other parts of Sumatra (from the 5th of June 1602), and Bantam in Java. An alliance was established with Aceh, the first British East India Company factory established at Bantam and a commercial mission despatched to the Moluccas. The return voyage from February 20 to September 11 1603 was speedy and prosperous, and Lancaster (whose success both in trade and diplomacy had been brilliant) was rewarded with a knighthood in October 1603.
Lancaster continued to be one of the chief directors of the East India Company until his death in May 1618. Most of the voyages of the early Stuart time both to India and in search of the Northwest Passage were undertaken under his sponsorship and direction. In July 1616, Lancaster Sound, north-west of Baffin Bay (74° 20' N.), was named by William Baffin after Sir James.
His will (dated 18 April 1618) established two charitable trusts administered by the Skinners' Company. One was for the benefit of officials and poor people in Basingstoke, and was subsequently transferred by court order to Basingstoke Corporation in 1717. The other was for poor divinity students at Oxford and Cambridge, to whom the Skinners' Company still makes grants today.