James, a Bluebirds academy graduate having joined at Under-9 level, signs a contract with the Green and Whites until the end of the season having had his contract cancelled by mutual consent.
The 20-year-old became a key part of Cardiff’s Under-21 side before arriving in Somerset, having made his first team debut against Chelsea in the Premier League in May 2014.
Having represented Wales at Under-19 level, James will add to Darren Way’s defensive options as the Glovers looks to surge up the Sky Bet League Two table.
After securing the youngster’s signature, Way said: "I’m expecting Tom to come in and develop at this Football Club as he is a great addition for the future. He’s got great technical ability and is someone that fits into our system and what we’re trying to build at this Club.
"He’s had interest from a number of other clubs so to secure his services is a good additional to our squad."
Tom will wear the number 32 jersey at Huish Park.
Everyone at Yeovil Town Football Club wishes Tom all the best during his stay in Somerset.