The 29-year-old had also been linked with a number of other high-profile suitors, including the Blancos' arch-rivals Atletico, but ultimately decided that Goodison Park was the best place for him to open the next chapter of his career.
Most of his final campaign at Madrid was spent on the bench after his return from a two-year loan spell at Bayern Munich, and he made no secret of his desire to move on in search of regular playing time.
Carlo Ancelotti, the man who initially lured James to the Bernabeu from Monaco in 2014, played a key role in convincing the midfielder to join the Toffees, but one of the ex-Madrid star's closest family members says he missed out on the transfer he desired most.
The Colombia international's stepfather Juan Carlos Restrepo told Cadena SER: "James would have liked to sign for Atletico Madrid.
"It is a source of pride that a club like Atleti had been interested in him. Besides, there are the fans and he would have felt at home with them."
Restrepo went on to reveal that James is already happier in his new surroundings than he was during his last few months at Madrid, while criticising the playmaker's former manager Zinedine Zidane for failing to utilise his talents properly.
Asked if his stepson feels any sadness after leaving the Bernabeu, he responded: "He is now comfortable and calm on the pitch. They are past experiences, now we are satisfied.
"If you see the minutes he has had on the pitch, Zidane certainly did not take James into account. James feels very liberated after signing for Everton."
James impressed on his full debut for Everton during a 1-0 win at Tottenham on the opening weekend of the new Premier League season, and produced an even better display against West Brom at the Hawthorns on Saturday.
The Colombian scored his first goal for the club in a 5-2 victory for Ancelotti's men, and also recorded an assist to help the Toffees storm to the top of the early top-flight standings.
He will be in line to feature once again when Everton take on Fleetwood in the third round of the Carabao Cup on Wednesday, before their attention shifts to a meeting with Crystal Palace at Selhurst Park three days later.