The popstar, 44, has been dating boyfriend Rodrigo Reis for four years, but during the early 00s when he first found fame with Blue, James hid his sexuality.
In an interview with The Mirror ahead of performing at Pride events across the UK with his Blue bandmates Lee Ryan, Simon Webbe and Antony Costa, James explained the lengths he went to in covering up his true feelings.
He said: "I remember when I was in Blue the first time around, there were all these rumours I was dating my friends Geri, Martine and Tara and I used to feel relieved.
"I was playing Pride with Blue and feeling such a hypocrite because everyone was celebrating their sexuality and I was still in the closet.
"Now I’m performing Blue hits and songs from musical theatre in full drag. I love it."
James described wearing drag as like being in "a very camp Superman costume", saying that he found it empowering.
He had supposedly dated Palmer-Tompkinson from 2008 to 2009, but in 2009 gave an interview saying that he was bisexual and in 2012 came out privately to co-star Webbe, who supported him to tell his mum.
In 2019, he released photos of himself with Reis and has described how his 28-year-old partner has helped him feel comfortable in his own skin for the first time.
James also credited best mate Denise Van Outen with helping him to feel proud to be gay, calling her "the ultimate gay icon and ally" as well as "the kind of girl best mate every gay guy needs".
He has now joined Van Outen as her Celebrity Gogglebox sofamate after she split from fiance Eddie Boxshall.
The pair took part in a celebrity version of The Circle recently, but despite being close friends Van Outen failed to work out James' identity who was playing under a fake profile.
Watch: Crowds gather for 50th anniversary of Pride in London