The comedian tried on a few of the singer's iconic looks, ranging from her VMAs meat dress to her Brit Awards ruffled white gown.
"I don't like it when fashion fails me," said Lady Gaga.
"It rarely does," said James, in all seriousness.
"Oh no, I don't know about that!" laughed the singer. "Or maybe I fail fashion? I guess with me I just never worry about who likes it or doesn't. Kind of, the point is to be unfashionable."
James tried on a copy of Lady Gaga's meat dress, complete with slices of ham and strips of bacon.
"The good thing with this one is, you always have a snack," said James, tearing off bits of meat. "You just go, 'Ooh I'm hungry.'"
As the pop star recoiled in disgust, James said: "Gaga look at me. If you can't take it, how do you think they felt at the VMAs?"
"I really think you should take that off," she replied.
The chat show host also tried on Lady Gaga's white Brit Awards dress, wearing a matching wig and mask.
"Now this, this is my favourite," said James. "It's not ideal for driving but I do feel alive in it."
"I mean, out of all of them, that's the best on you," said Lady Gaga.
The "Bad Romance" singer, who was promoting her new album Joanne, also opened up about her writing process – and revealed that it only took a few minutes to write some of her most popular songs.
"I wrote "Just Dance" in ten minutes."Poker Face" was ten minutes. "Born This Way" was just ten minutes," she said.
Watch the full Carpool Karaoke video above!