The axe comes after James publicly hit out at label boss Simon on Twitter last week.
James’ new song, called ‘Follow The Leader’, includes the lyrics: ‘I’m gonna blow up your family like I’m a terrorist.’
The 26-year-old took to Twitter last night to try and defend the song, writing: “The song “follow the leader” from the mixtape is not promoting terrorism, it’s a story, a reciting of a Stan Esc letter from a demented fan.”
He added: “Just for the record.”
However, this doesn’t seem to have been good enough for Simon, with a source telling a UK newspaper: “He has done himself no favours with his outbursts, it’s as if he’s almost willing Syco to drop him.
“Simon and Syco have been extremely loyal to James throughout his problems but there’s only so much they are prepared to put up with. It feels like the end of the road for him at Syco – James is his own worst enemy.”
The source continued: “It was idiotic of him to invoke images of suicide bomber no matter what the context. It’s not the sort of material a mainstream company like Syco or show like The X Factor want to be associated with.”
James is no stranger to controversy: the axing comes after iTunes offered refunds of his debut album after he was slammed for a homophobic rap and, more recently, he fired his PR team on Twitter.