The three-day music event at Rouken Glen Park will take place from Friday, July 30, to Sunday, August 1.
James will perform on Friday, July 30, joining Underworld on the opening day.
Frontman Tim Booth said: “We are very happy to be playing the Playground Festival, sandwiched in between Underworld and Leftfield.
“Underworld have created some of my favourite tracks – at least one will be danced to at my funeral – they are true pioneers of new musical forms that deepen with age.”
Festival favourites James will bring their packed back catalogue to provide a hit-packed set, as well as unveiling some long-awaited new music.
They join previously announced star names including Kraftwerk 3D, Nile Rodgers and CHIC, Gary Numan, Jon Hopkins performing live, Neneh Cherry, Kelis and many more.
Tickets are on sale at Playground Festival
Ashleigh Elliott, of Playground Festival, said: “We are thrilled to reveal our special guests, welcoming James to Rouken Glen Park.
“James are one of the best festival bands of all time, with an incredible array of singalong anthems our family will love.
“We believe this is the best festival line-up of 2021 and, judging by ticket sales, our festival family agree.”