On March 8, 1912, the northwestern part of the state of Nebraska was erected into a diocese, and Kearney was chosen as the residence for the Bishops of the diocese. The Most Reverend James A. Duffy was chosen as the first Bishop of Kearney. He was consecrated in Cheyenne, Wyoming, April 18, 1913 and installed in the Cathedral of Kearney on April 24, 1913.

              On December 30, 1914, at the instigation of Bishop James A. Duffy, St. James purchased two lots on the southwest corner of 25th Street and 2nd Avenue for $1,800 and on April 1, 1915, the adjoining lot on 25th street was purchased for $900. Plans were then made for a new grade school to be built on these two properties. With an aid of $10,000 from the Catholic Church Extension Society of Chicago, contracts were let and St. James Grade School was completed and dedicated in September, 1915. The school was staffed and operated by the Dominican Sisters of St. Catherine in Kentucky. The school was closed at the termination of the 1967 academic year with the explicit understanding that the seventh and eighth grades continue in the Catholic High School of Kearney.

             Kearney remained at the seat of the diocese until April 17, 1917 when Grand Island was made the See City by Pope Benedict XV, at the request of Bishop Duffy. Bishop Duffy requested the change of the See City to Grand Island because that city, being larger, provided better resources, at at that time Kearney had only 65 Catholic families, not all of them practicing Catholics.

            Fr. Henry Muensterman continued as pastor until August 15, 1938. On August 27, 1938, Fr. Francis J. Tschida was named pastor. In 1951, Fr. Tschida was made a Domestic Prelate and was appointed as Vicar General of the Diocese. He served the parish as pastor until his death in December 1956. After the death of Monsignor Tschida, Bishop Paschang appointed Father Raymond Miles pastor of St. James parish on February 1, 1957.  That same month the parish purchased 60 acres of land at 35th Street and Avenue A for the city's first Catholic High School. That year the church was refurnished at a cost of $6,000 and the St. James Grade School was remodeled at a cost of $25,000. Construction on the new Catholic High School began in July of 1960. In November of 1960 the parish purchased the property at the northeast corner of 24th and 2nd Avenue for $15,000. Another $10,000 was spent transforming this home into a convent for the Dominican Sisters who staffed the St. James Grade School. The Sisters moved into the new convent on February 22, 1961.