Little told their official website: "I'm delighted to have signed David again as he fits the bill for the wide player I have been looking for. His speed and positional play will be a great asset to the club."
The player himself said: "It's great to sign for Tranmere Rovers, a big club with lots of potential to do well and I'm looking forward to working with Brian again."
The former Oldham trainee was first signed by Little in 2001, taking him from Huddersfield Town to Boothferry Park. However, a year later - after 1 goal in 47 appearances - then manager Jan Molby allowed him to join Plymouth Argyle on a free transfer.
But he's failed to make an impact at Home Park, making just 6 starts in the league for them. After only 10 minutes on the pitch for them this season, he was loaned to Macclesfield last month where he played 5 times. Plymouth have agreed to terminate his contract so he can join Little's Division Two strugglers.