Reid will be with the League Two new boys until 3 January, 2021, on a Standard Loan agreement.
Barrow are managed by former Blues favourite David Dunn, a one-time Club record signing.
They have had a tough start to life in the EFL after promotion from the National League was confirmed in June, following a vote to determine placings on a points per game basis.
Barrow were four points clear when football was suspended due to COVID-19 in March.
They currently sit 21st in the League Two table on three points from their opening five matches.
Barrow have yet to win in the league and Dunn will be hoping that the ability of Reid in the forward line can bring an extra dimension to the Cumbrians.
Head Coach Aitor Karanka is keen that 19-year-old Reid secures more competitive experience to assist his development.
As Karanka has brought in Jon Toral, Jonathan Leko, Scott Hogan and Riley McGree this transfer window to bolster his frontline options, opportunities for centre-forward Reid have become limited, hence the loan.
It will be the first loan experience for Reid, 19, who made four appearances for Blues last season, when football resumed after lockdown.