This week's episodes have seen Jesse (Luke Jerdy) pass away on his wedding day, after drinking too much and collapsing following his discovery that James and Grace Black both shot Mercedes.
Tonight's E4 episode (January 22) will confirm that Jesse died from alcohol poisoning, leaving his loved ones in shock.
Speaking to Digital Spy about what's to come, Gregory explained: "James knows that he had a role to play in what happened to Jesse. He now has to deal with the guilt of shooting Mercedes, and the guilt of being partly responsible for Jesse's death.
"James puts those two things directly next to each other. It's pretty crushing for him.
"That will go on for a little while. It does come to a natural head, but certainly over the next couple of months, James goes through some difficult times."
Spoiler pictures from next week show James on a downward spiral as he sits helplessly on the floor of the village and drinks wine in the middle of the day.
James's mum Marnie Nightingale (Lysette Anthony) tries to get John Paul McQueen (James Sutton) on board with helping him out of his slump.
Gregory continued: "James was already pretty shocked after realising that he made a mistake by shooting Mercedes. He can't believe that he could have got it so wrong. It has rocked him to his core."
The actor also shared his thoughts on James heading down this darker path.
He said: "I was surprised when I found out that James would shoot Mercedes. Generally when you hear you're going to shoot one of the biggest characters on the show, you assume you're going to do some jail time. And James has done some jail time already!
"But I was excited because I knew the writers would have us on a rollercoaster, and thus it has proved. Any time you're involved in one of these kind of storylines, it's an exciting time.
"[Executive producer] Bryan Kirkwood and I had a meeting and he told me what would happen before we started shooting it, which was really helpful, actually.
"With the 'Who Killed Amy?' story a few years ago, none of us knew who it was, which can make it difficult to pitch your performance. You have to manage the need for secrecy against the actor's need to properly perform. It was nice to have that trust to keep it close to my chest."
Hollyoaks airs weeknights at 6.30pm on Channel 4, with first look screenings at 7pm on E4.
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Digital Spy Soap Scoop video – hit play below for all the latest Hollyoaks spoilers, as drug dealer Jordan causes trouble in the village.
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