James Craig's father was Captain T M Craig, a pioneer of the development of Borneo. James attended Daniel Stewart's College in Edinburgh, being dux of the school in 1885. He then was an undergraduate at the University of Edinburgh, where he was awarded an M.A., then went to Emmanuel College, Cambridge, where he was a Wrangler in the Mathematical Tripos. In 1893 he was appointed as a Master at Eton, then as a master in Winchester two years later. In 1896 he entered the services of the Egyptian Government. He married Isabella Wilson in 1897.