The former England goalkeeper made 19 appearances for the League One club since arriving from Bristol City in September last year.
The 42-year-old, who played his last game for the Cherries in a 3-1 defeat at Walsall in mid-January, has found it difficult to force his way back into manager Eddie Howe's first-team plans.
James started out at Watford in 1988 and during a career spanning 25 years played for Liverpool, Aston Villa, West Ham, Manchester City and Portsmouth.
He made his debut for England in a friendly against Mexico in 1997 and won a total of 53 caps for his country.
James, awarded an MBE in 2012, was recently linked with a move to Iceland club IBV.