The Republic of Ireland international, who is currently away with the U21 national team, spent the entire 2020/21 season on loan at Prenton Park, featuring 42 times as the Club reached the League Two Play-Offs and Papa John’s Trophy final.
O’Connor will link up with his Tranmere Rovers teammates next week, and manager Micky Mellon was pleased the 21-year-old was re-joining the Club on loan.
He said: “Lee is not only a full back; I like him in midfield too. Apart from Jay Spearing, our midfielders are all forward running, so we don’t have a lot of players with Lee’s qualities in the building, so he is another fantastic addition to the squad.
“Lee can also play as part of a three-man centre back partnership, he can play full back, and he brings quality in several different areas of the pitch.
“He is currently away on international duty, which shows the pedigree he will bring to the team. Lee is a very talented player; he has a great mentality, and he knows what it is all about playing for Tranmere Rovers.
“The supporters know of his qualities. The staff who worked with him last season told me how great of a lad he is too, so it wasn’t a hard decision to make in bringing him back to the Club.”