In 1963, Nelson was appointed as Associate Professor of Christian Ethics at the United Theological Seminary of the Twin Cities and became a full professor in 1968. Nelson was among the first religious professionals--along with the Rev. Jim Siefkes--to engage in the University of Minnesota's Program on Human Sexuality, beginning around 1972. Nelson, his  wife Wilys Claire, Siefkes and others developed a seminary component of this program that became a national model of seminary sexuality education, including a strong LGBT component. Nelson served on the Task Force on Human Sexuality in the United Church of Christ from 1974 to 1977.

Nelson moved into the national spotlight with the publication of an article "Homosexuality and the Church," in Christianity and Crisis magazine in 1977.  This article developed a typology of theological-churchly responses and made a case for full acceptance of LGBT persons. The article was later reprinted in many other venues and referred to in numerous other writings. His book Embodiment: An Approach to Sexuality and Christian Theology (Pilgrim Press 1978) provoked new Christian attitudes and approaches to human sexuality and homosexuality. 

"James B. Nelson has given us another first-class study in theological ethics. His comprehensive and imaginative treatment sets both traditional and unconventional sexuality issues within the context of God's fulfilling grace. Nelson's masterful handling of empirical data, ethical method, and theological perspective makes this book indispensable for pastors, counselors, and all who wish to think constructively about human sexuality."

— Harold H. Ditmanson, St. Olaf College, Northfield, MN