Charles O'Neill, stated that Dillon ”was a model of regularity, piety and industry.”[1] He studied Philosophy and Theology and graduated as a Doctor of Divinity from the Sorbonne University of Paris.
He remained in France for several years after his ordination, and then in 1776, he returned to Ireland and was one of two candidates for the vacant post of Parish Priest of Armagh at the end of June.
In mid-July 1776, the post was given to Father James Crawley, the curate of St. Peter's, Drogheda, County Louth.
Dillon was then appointed parish priest of Kilmore (Mullavilly) and Canon of the chapter under the title Prebendary of Ballymore.
In 1778, he was appointed Vicar-General of the Armagh Archdiocese and parish priest of Killyman (Dungannon), where he built a church.
[2] On 22 May 1796, Dillon was consecrated Bishop of Nilopoli in partibus and Coadjutor of Raphoe by the Archbishop of Armagh, Dr. Richard O'Reilly.
The Bishop of Raphoe, Anthony Coyle was ageing and was being given a difficult time by a group of factious priests.
When the Bishop of Kilmore Charles O'Reilly died on 5 March 1800, James Dillon was appointed as his successor, to the relief of the Raphoe clergy.
O'Reilly, Archbishop of Armagh and Primate of all Ireland, Plunket of Meath, Dillon of Kilmore, Murphy of Clogher, M'Mullan of Down and Connor, O'Donnell of Derry, O'Dwyer of Dromore, and M'Laughlin of Raphoe.
Unacquainted with his own clergy and perhaps fond of his own ease, he was made the dupe of the panders of adulation and the slave of faction".