Little took charge of City in 2000, and took them to play-off defeat in his first season in charge. After an impressive start to the following 2001/02 season, things came off the rails and he was out in February.
Since then, the former Darlington, Leicester, Aston Villa, Stoke and West Brom manager had been working as a pundit on Sky Sports, but spoke of his decision to return to management on the official Tranmere site: "In the last few months I have been looking to get back into management, after enjoying a breather from the game and when this job became available I let a lot of people know that I was interested.
"I know Ray Mathias very well and I have to admit that I was surprised when the job did become available because of how well the team had done last season but I'm delighted to be given the chance with Tranmere."