The 27-year-old will remain with the Sky Blues until January 5 and could make his debut in Saturday's game at MK Dons.
Dagnall joined Barnsley from Scunthorpe in January 2012 and has since made 65 appearances for the Tykes, scoring 12 goals.
He featured regularly for Barnsley at the start of the season but his only appearance since September 17 came as a substitute in the 1-0 defeat at Millwall last Saturday.
Dagnall's loan departure follows the arrival at Oakwell of Marcus Tudgay on a loan switch from Nottingham Forest.
Coventry boss boss Steven Pressley told the club's official website: "I've spoken about our need to add to the squad to freshen things up and give our players some help and Chris will certainly be able to do that.
"I'm fully aware of his capabilities having spent quite a lot of time watching him in the early part of his career at Rochdale and he made a lasting impression on me.
"His work ethic and his eye for goal will certainly give us a boost and I'm looking forward to working with him."