The Reds exit the Checkatrade Trophy with penalty shootout defeat at Oakwell.
In what was a thrilling, end-to-end cup tie and one that the Reds should probably have emerged victorious in considering the opportunities they had, but the match was decided by penalties, with the young City side edging the shootout.
Barnsley had taken the lead on 17 minutes when a fantastic right wing run and cross by Jordan Williams was slotted in by Victor Adeboyejo inside the six yard box.
There were further chances for Brad Potts, Cauley Woodrow and Mike Bähre in a dominant first half but the opportunities were squandered and the visitors hurt the Reds at the end of the first half, equalising through Rabbi Matondo who squeezed a shot beyond Adam Davies after a jinking run.
HALF TIME: Barnsley 1-1 City 21s
City went 2-1 ahead on 59 minutes when Poveda was allowed space to run into and from 30 yards out he let fly with a left-footed effort that screamed into the bottom left-hand corner giving Davies no chance.
But Barnsley levelled immediately..
It was a delicate chipped ball over the defence by Bähre which saw Williams get in behind his marker to finish low and hard beyond the 'keeper.
Alex Mowatt was introduced in place of Bähre and he soon assisted the Reds' third goal with an inswinging corner that Liam Lindsay nodded home into the far corner of the net.
On 67 minutes Woodrow was tripped inside the box and he stepped up to put the game beyond City. However, his powerful penalty kick was too close to 'keeper Scott who parried it away and the Reds would be made to pay for this missed opportunity.
Less than 10 minutes later, City countered at speed and it was Poveda who grabbed the equaliser with his second of the night, finishing with his left foot from close range for 3-3.
Mowatt and Woodrow both went close to giving Barnsley the lead but the match went to penalties.
And the away side won through, 5-3 in the end with Mamadou Thiam's saved spot-kick the difference.
FULL TIME: Barnsley 3-3 City U21s (City 5-3 on pens)
Davies, J.Williams, Pinnock, Lindsay, Pinillos, Potts, Bähre (Mowatt), Bird (Moore), Thiam, Woodrow (Brown), Adeboyejo.
Att: 3,070
