The first player Reds manager Danny Wilson and chief executive Ben Mansford met following relegation to League One last season penned a two-year deal on Tuesday.
James Bailey, 25, joined Barnsley almost exactly a month after the club's last signing Conor Hourihane, who is expected to partner the former Crewe and Derby man in the centre of midfield.
"James is technically gifted and can pass a ball but he is also energetic and will win it back for you," said manager Danny Wilson, who has been chasing Bailey since early May.
"We have got a very, very determined and hungry young player on our hands."
Bailey began his career at Crewe Alexandra where he made 55 appearances before joining Derby County alongside team-mate John Brayford in a deal worth £1.3million.
He was a regular player in his first two seasons with the Rams but fell out of favour with manager Nigel Clough who loaned him to League One Coventry – then managed by ex Reds boss Mark Robins – for the 2012/13 season.
He scored twice in 30 games for the Sky Blues then returned to Derby where he played for a combined total of eight minutes in two appearances last season, one against Chelsea in the FA Cup, before leaving with a record of one goal in 64 matches.
He was on trial with Doncaster Rovers but joined their local rivals Barnsley instead.