The Canadian band have got together with the former LCD Soundsystem star at his DFA studio in New York to prepare tracks for their fourth album, the follow up to 2020's 'The Suburbs'.
James told the Daily Star: ''The album is going great. I am too in the middle of it to know which way it will go in the end. But it's going to be a fantastic record.''
The 43-year-old says he's not had to be too hands-on as a producer, as the seven member group - led by Win Butler and Régine Chassagne - are all seasoned studio experts.
He continued: ''They are so good they could produce themselves, so my role in the band depends on the song.
''Sometimes I am going around making suggestions and playing instruments, other times I'm just helping the arrangements.''
Arcade Fire and LCD Soundsystem have previously toured together, making James and the group close, although since retiring his most famous project, he admits finding the energy to continue as a musician is difficult.
He said: ''It's harder now to make music. You have to ask yourself what your motivation is.''
Arcade Fire were never going to make your standard fly-on-the-wall documentary. While they appear to...