The destroyer escort was named in honor of Lieutenant Commander James Edwin Craig (1901–1941), who was killed in action aboard USS Pennsylvania during the Japanese attack on Pearl Harbor on 7 December 1941.

On 15 March, she escorted the oiler Cacapon from Espiritu Santo to a fueling rendezvous with Task Force 36, which was engaged in operations against Kavieng, New Ireland, and Emirau Island, "the last link in the ring around Rabaul."

On 31 March, James E. Craig departed Espiritu Santo in company with Escort Division 37, including Lovelace, Manning, Neuendorf and Eichenberger.

On 26 April, James E. Craig joined a convoy of escorts and transports bound from Cape Sudest to Humboldt Bay to support the invasion of Hollandia, underway since the 22nd.

During the remainder of June and through July, James E. Craig continued escort and anti-submarine duties along the northern coast of New Guinea.

While on ASW operations off Wakde, she conducted prolonged, successful bombardments of enemy supply depots at Sawar, 11–12 July, expending some 3,300 rounds of 3-inch and 1.1-inch shellfire.

Back at Humboldt Bay on 14 November, she joined a large convoy of transports, amphibious craft, and escorts underway on the 17th for the Philippine Islands, to support the vital, Allied foothold on Leyte, established some four weeks earlier.

She spent the remainder of the month escorting fleet tankers and practicing anti-aircraft and night torpedo firing drills at Padaido, Dutch East Indies, and Humboldt Bay.

On 28 December, Escort Division 37 departed Humboldt Bay with a convoy of tankers and merchant ships bound for Leyte, where they arrived on 1 January 1945.

The following day, James E. Craig stood out for Mindoro Island to join Task Group 77.2, ordered to support landing operations on northern Luzon.

Standing into San Fernando Harbor four days later, she commenced anti-submarine and escort patrols along the coast of Luzon that continued to 13 August when she departed for Manila.

Once at Manila, she resumed ASW operations to the 27th; then, as escort in company with Eichenberger, she convoyed tugs and tows en route Okinawa.

An impending typhoon disrupted the convoy on 1 September; high seas and 70-knot (81 mph; 130 km/h) winds scattered the ships and separated tugs from their tows.