The 20-year-old began his career at Bradford City, coming through the academy ranks and making his senior debut for the club aged 17 against Preston North End.
He gained further senior experience with loan spells at Altrincham and Bradford Park Avenue before leaving to join Barnsley, initially on a six-month contract after a successful pre-season trial.
After impressing during that period, he went on to sign an extended 18-month deal with the club and has been a regular in The Tykes' Under-23 side.
Tranmere Rovers manager Micky Mellon said of the signing: "I'd like to welcome Dylan to the Club.
"He's a winger with great pace who has a lot of potential and is someone Barnsley think very highly of.
"I'd like to thank Paul Heckingbottom and Barnsley for allowing him to join us."
Mottley-Henry will be available for Wednesday night's home game against Leyton Orient.