Ronnie Moore made one change to the side that defeated Huddersfield 3-0 eight days ago, as Steven Jennings replaced Mike Jones in midfield as Rovers played a diamond midfield in a 4-4-2 formation.
Rovers had the better of the early exchanges in the game, as Ronnie Moore's side tried to get the ball down and pass it on the good City Ground surface. After a foul on Taylor, Cooper saw his free-kick from 22-yards deflected wide whilst Taylor forced Smith into a save from the resulting corner.
Steven Jennings, at the tip of the Rovers midfield diamond and getting in to good attacking positions, had a chance for Tranmere on 16-minutes as he shot from distance. The ball was deflected straight to Greenacre though, and only a superb last ditch challange put the ball out for a corner when Greenacre looked destined to score from close range.
However, the first half dragged out in to a battle between the two midfields. Both sides failed to break forward, with the referee keen to give a foul against any attack who dared jump for a ball in the air, with Gareth Taylor getting booked for backing in on 36 minutes.
Both defences stood strong though, and each played their offside trap well, with the Rovers strikers in particular being flagged offside on a number of occassions through-out the half. This was indeed to become a trend for the rest of the match for those in a gold shirt.
Forest's first chance in what had been a difficult half for them didn't come until the 38th minute. Aaron Davies had the chance, as he chipped the ball over the Rovers defender and vollied towards goal, only for Coyne to comfortably tip the ball over for a corner.
Coyne was also called into action not long after saving from Davies, as this time Kris Commons pushed forward and shot from 25-yards and his low shot was saved well by Coyne, with the ball bouncing just before it reached the Welsh international.
At half-time, Rovers looked set for a point in what had so far been a poor and somewhat boring first half. However, Ronnie Moore's side returned to their old tricks as either they put in a much poorer second half display or their Nottingham Forest opponents improved greatly.
On 49-minutes, Forest got the break through as Junior Agogo netted from the penalty spot. Julian Bennett saw his cross handled near the penalty spot by Shane Sherriff and after the referee had awarded the spot-kick, Agogo hit the ball to the right, sending Coyne the wrong way and making it 1-0.
Tranmere went in search of the goal, and on 58-minutes Antony Kay vollied well over from Stockdales cross after good work in defence by Chorley, whilst on 64-minutes Craig Curran and Adnan Ahmed replaced Steven Jennings and Kevin Cooper for Rovers.
Tranmere now pushed for a win and started to send more men forward as they went in search of a goal. However, in turn, as Rovers threw more men forward, the game opened up and gave Forest much more space to counter attack and after the introduction of Tyson for Commons on 60-minutes, the Tricky Tree's had great pace upfront to utalise as they went forward.
On 67-minutes, Gareth Taylor came close against his former club as he smashed the ball just wide of the post after Smith had only punched Sherriff's cross to the Tranmere number nine.
Eight minutes later and Rovers were on the offensive again as Kay saw his cross tipped over by the back-peddling Smith, but Forest were seeing more and more of the ball in attacking positions and it only looked a matter of time before they got a second.
Indeed, on 78-minutes, that goal came, courtesy of a brilliant volley from the substitute, Nathan Tyson.
Greenacre lost the ball in midfield for Tranmere and Forest broke down their left through left-back Bennett. The number 29 sent in another cross close the penalty spot, where Tyson, side-on to the goal, turned and vollied the ball with his first touch, sending in off the cross bar.
Rovers now looked as if they didn't want to even get a goal back and Forest kept pushing forward. Coyne made a good save on 83 minutes from Davies, making his first start for the club, whilst a number of balls went flashing across the area.
Tranmere did have two more chances before the game was out with Kay first hitting a weak long range effort straight at Smith before the 'keeper made a superb one-handed save from Sherriff's header at close range soon after, diving low to his left.
In the end though, Tranmere were simply not good enough on the day. Despite some great defending, they didn't take what few chances they had and the home side Forest did.
Maybe Ronnie Moore shouldn't have changed the side that beat Huddersfield but then in the first half Rovers competed well and it was only the second half when Forest began to close out the midfield and Rovers were choked.
Jones' Man Of The Match: For Rovers, the whole defence was excellent. The stand out performance though once again came from Ian Goodison who won everything in the air and on the ground, once again displaying his fine defensive abilities at the City Ground.