Younger brother of former United midfielder Matty, Reece performed impressively in an outing for the Under-18 Academy side at the end of the 2011/2012 season.
The defender produced an accomplished display at left-back in a 2-1 win against Stoke City and was rewarded with a full-time contract as he is expected to be part of Warren Joyce's Reserves squad.
James was at Preston's Academy after also being on the books at Rossendale United and Blackburn Rovers.