The 22-year-old striker spent 2019-20 on loan at Cambridge United, scoring eight times in 28(+6) appearances with the League Two side last season.
The Academy graduate has made 6(+5) appearances for the Royals first team, scoring his first league goal in a 3-2 defeat at Carrow Road back in March 2018.
Since then, the forward has enjoyed loan spells at Oxford United and Shrewsbury Town before earning regular football at the Colchester Community Stadium last season.
He will now spend the next two-and-a-half months at Prenton Park, completing a loan switch which will see him stay with Rovers until Thursday 7th January 2021.
Smith was not registered in time to be eligible to feature in Rovers’ away clash at Newport County this weekend, but he could make his debut when Mike Jackson’s side take on Leyton Orient at home on Tuesday night.
Everyone at Reading Football Club would like to wish Sam the very best of luck during his time with Tranmere.