The left-winger was a surprise inclusion in the starting line up against Chelsea at Old Trafford on Saturday.
United and the Blues played out a rather dull 0-0 draw, with the home side having slightly more attacking threat.
James was extremely poor before coming off for Edinson Cavani in the 61st minute.
"Dan's confidence is high, of course, because he's starting games with the quality of players he's in the team with," Solskjaer told reporters.
"Against Chelsea was one of those days where he played against some good players as well, he had some moments, and we keep on working.
"Dan's had a really good impact at the club and we're looking forward to developing him more."