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By 1951 he would again be unemployed and bankrupt.

In 1945 he was able to make a comeback and won the Oscar for Best Supporting Actor in A Tree Grows in Brooklyn (1945), but his rejuvenated career would not continue.

He would appear in small roles in films during the early 1940s, but those parts were few and far between.

In 1937, Dunn, an avid and accomplished pilot who owned his own plane, helped federal agents by flying them and their prisoner to New Orleans. He returned to Los Angeles before the studio executives knew he had even gone.

In 1936, Dunn participated in the Ruth Chatterton Air Derby; the course of the race spanned from Cleveland to Los Angeles.

In 1935 musicals at the new 20th Century-Fox were out and Dunn would move to the "B" list, from which he would never return.

In The Payoff (1935) he plays the nice guy newspaper columnist whose wife ruins his career.

While at Fox, he appeared with Shirley Temple in her first three features: Baby, Take a Bow (1934), Stand Up and Cheer! (1934) and Bright Eyes (1934). Dunn's screen character was usually the boy next door or the nice guy.

In 1933, he was engaged to actress Lona Andre. She cancelled the wedding at the last minute, fearing marriage would hurt her career.

James Dunn worked on the stage, in vaudeville and as an extra in silent movies before he was signed by Fox in 1931.

His first movie with Fox was 1931's Sob Sister (1931).

By the late 1930s he was drinking heavily and became unemployable.