James was sent off with 24 minutes on the clock against the Blues, all-but condemning his team to defeat, with the visitors already one up.
The Welshman did manage to get some of the ball, but the subsequent contact with Mateo Kovacic saw him red carded.
James connected high on the Croatian, and despite touching the ball, a red card followed due to the aggressive nature of the challenge.
And speaking on Match of the Day, Keown tore into James for his challenge.
“Unbelievable,” he said. “And this is the thing, you want your players at boiling point but you don’t want them to boil over.”
Gary Lineker did defend James, saying it might have ‘looked worse’ than it was, but Keown still wasn’t impressed.
Lineker interjected: “Sometimes I think they look worse than they actually are, because he gets the ball first and follows through, but I know what you mean.
Keown added: “It’s something James didn’t do at Manchester United.
“I don’t know whether it comes with playing with Leeds – getting stuck in and getting around people – but at the moment, it’s costing them.
“They’ve had a catalogue of injuries, down to 10 men again.
“Everything that can go wrong in this game went wrong and if you look at the fixtures coming up, it does feel like now it’s starting to fall apart for Leeds.”
James is now set to miss the final two games, costing Leeds not only in the game against Chelsea, but in their overall push for safety.
After Wednesday night’s results, the Whites are occupying the final relegation spot, goal difference behind Burnley and two points behind Everton.
Though, both of the teams above have a game in hand still to play.