Jones had been serving in the role on an interim basis since the Suns dismissed former general manager Ryan McDonough in October.
"James has demonstrated a remarkable ability to manage the day-to-day efforts of our front office while developing strong relationships with our players, coaches and those across our organization and league," Suns owner Robert Sarver said.
"Furthermore, he is instilling the same championship culture and standard that he experienced on multiple occasions as a player. I have the utmost confidence in James as the leader of our basketball operations moving forward, and we are aligned in the ultimate goal of one day bringing an NBA championship to Phoenix."
Along with James' promotion to the permanent role, Phoenix also confirmed it hired former Detroit Pistons executive Jeff Bower as its senior vice president of basketball operations. Bower will report to Jones under the Suns' new hierarchy.
"Jeff brings a wealth of knowledge in every facet of basketball operations, is of high character and well respected in league circles, and has a proven track record of influencing organizational success," Jones said. "His expertise in creating and executing a plan will be invaluable as we build our team moving forward."