The single mother was stabbed 68 times in her bedroom at the back of her Thornbury bookshop in 1980, by someone police believe was known to her.
Her murder, which has been the subject of the ABC's Trace podcast, has gone unsolved for 37 years.
In July, Victoria Police revealed that at a bloodied pillowslip from a separate crime scene had been mixed up with evidence from Ms James' bedroom.
DNA from the pillowslip had been used to rule out a series of suspects in the case, including paedophile priest Father Anthony Bongiorno, who is known to have sexually abused Ms James' son Adam, who has cerebral palsy and Tourette syndrome.
Bongiorno was also seen near the crime scene, covered in blood.
Speaking to ABC Radio Melbourne's Jon Faine, Chief Commissioner Graham Ashton said police still believed the mix-up was a "bungle rather than cover-up", but confirmed it was being looked at by a deputy commissioner.
"You don't immediately think it's a cover-up or some conspiracy when there's not facts to support that," he said.
"As I understand, the deputy commissioner and the forensics department are having a look at that matter.
"I'm sure if they come up across anything that suggests there's anything around a conspiracy, they won't be backward in bringing it out and investigating it."
Collusion between Victoria Police and members of the Catholic Church has happened in the past, including the notable example of the thwarting of investigations into Monsignor John Day over allegations of horrific abuse in Mildura in the 1970s.
Former police officer Denis Ryan, whose efforts to look into Day ended in his effectively forced resignation in 1972, received a formal apology from the force in 2015.
Ms James' family has called for the coroner to consider whether collusion was at play in their mother's case.
But since becoming aware of the DNA mix-up, Victoria Police has maintained it was the result of an internal error and had "nothing to do with the Catholic Church".
Commissioner Ashton said, so far, no evidence had emerged to challenge that view.
"We've had cases where that has happened, but generally there'll be indicators where things happen that just don't make sense," he said.
"Human error where people make mistakes — that does make sense because we're all humans and human beings make mistakes.
"If there's any suggestion that it's more than that, we'd jump on it quickly and have a look at it. We've shown that we're able to do that and we've done it regularly."
He said he believed the mishandling of the evidence was the result of an early lack of training and knowledge around how to handle DNA.