An interesting fact about Shields is that he almost fought a duel with Abraham Lincoln on September 22, 1842. Lincoln had published an inflammatory letter in a Springfield, Illinois, newspaper that poked fun at the Illinois State Auditor - Shields. Taking offense to the article, Shields demanded "satisfaction" and the incident escalated to the two parties meeting in Missouri to participate in a duel. Just prior to engaging in combat, the two participants' seconds intervened and were able to convince the two men to cease hostilities, on the grounds that Lincoln had not written the letters.

Shields was the senator from Illinois 1849 to 1855, from Minnesota from May 11, 1858, to March 3, 1859, and from Missouri from January 27, 1879, to March 3, 1879.

Shields was the nephew of another James Shields, also born in Ireland, who was a Congressman from Ohio. The younger Shields immigrated to the United States around 1826 and settled in Kaskaskia, Randolph County, Illinois. He served as a member of the State House of Representatives, beginning to serve in 1836, as a state Supreme Court justice, and as the state auditor. (He was elected when not yet a citizen; Illinois then required only that a legislator have been resident in the state for six months.)

In 1846, Shields was selected as a brigadier general of Volunteers to fight in the Mexican-American War. He served under Zachary Taylor along the Rio Grande. He commanded the 3rd Brigade, Volunteer Division, at the battles of Vera Cruz and Cerro Gordo, where he was wounded. He returned to fight at the battles of Contreras and Churubusco, his brigade now part of the 4th Division. He was again wounded at the Battle of Chapultepec. Following the war, he was appointed as Governor of Oregon Territory, but he resigned the following year to run for the Senate from Illinois. His election was voided by the Senate on the grounds that he had not been a United States citizen for the nine years required by the United States Constitution; having been naturalized October 21, 1840. He returned to Illinois and campaigned for re-election, and won the special election to replace himself, and was then seated.

In 1855, he was defeated for re-election, so he moved to Minnesota. He was elected as one of the two first Senators from that state, but his term was only from 1858 to 1859, and he was not re-elected once more. He then moved to California and served as a brigadier general of Volunteers from that state during the American Civil War. He commanded the 2nd Division of the V Corps, Army of the Potomac (subsequently part of the Army of the Shenandoah), during the Valley Campaign of 1862. He was wounded at the Battle of Kernstown on March 22, 1862, but his troops inflicted the only tactical defeat of General Thomas J. "Stonewall" Jackson during the campaign (or the war). The day after Kernstown he was promoted to major general, but the promotion was withdrawn, reconsidered, and then finally rejected. His overall performance in the rest of the Valley Campaign was poor enough that he resigned his commission and his departure was not resisted by the War Department.

In 1863 he moved to Mexico and operated mines, and then to Wisconsin, but in 1866 moved to Missouri, where he served as member of the state House of Representatives, and as railroad commissioner. In 1879, he was elected to fill the seat left vacant by the death of Senator Lewis V. Bogy. He served only three months and declined to run for re-election.

Shields died in Ottumwa, Iowa. He is buried in St. Mary's Cemetery, Carrollton, Missouri. He was the editor of A History of Illinois, from its Commencement as a State in 1818 to 1847 (1854). He represents Illinois in the National Statuary Hall.