City boss Kevin Keegan has allowed the 21-year-old to become Paul Hart's first permanent signing as Barnsley boss after giving him another chance at City this term.
"I am delighted for him and I think it is a great move for Chris," Keegan told the official club website.
"I gave him another year at the end of last season as I liked him around the place and the way he worked hard.
"He wants to be a player but he found that step up an inch to far. But he never stopped committing himself, never stopped trying."
He added: "I told him I think that Barnsley is a good opportunity for him and the chance to work with Paul Hart.
"The club has got a new chairman (Peter Ridsdale), it has plenty of ambition, and it is a club that has been in the Premiership, so I think it is a great move for him."
The Tykes are currently 11th and six points off the play-offs.