Skipper Kevin Nicholls smashed home Luton's equaliser from the spot in the second half after a fifth minute opener from Eugene Dadi.
Town had much the better of the first half despite going in a goal down at half-time, but Tranmere came back into the game in the second period forcing chances in the final 20 minutes.
The result left Luton two points clear of Hull in second-place, but the Tigers now have a game in hand after their match with Hartlepool was postponed due to Pool's FA Cup clash with Brentford.
Hatters roared out of the blocks with Steve Robinson and Steve Howard both hitting efforts at John Achterberg in the first three minutes.
But it was Tranmere who took the lead in the fifth minute when Ryan Taylor's long ball into the box was nodded down by Iain Hume into the path of Dadi who poked the ball home from eight yards.
Undeterred, Luton pressed again and visiting skipper Michael Jackson almost conceded an embarrassing own goal in the eighth minute when Robinson's cross bounced goalwards off his chest but Achterberg tipped over.
Kevin Foley fired over from six yards in the 23rd minute after Achterberg dropped Ahmet Brkovic's cross, but the Tranmere stopper made amends by keeping out Curtis Davies' diving header three minutes later after Chris Coyne's cross.
Hatters finally got the goal their play deserved eight minutes into the second half when Howard was upended in the box by Ian Goodison and skipper Nicholls slammed home his eighth of the season from the penalty spot.
Dadi headed just over from a Taylor corner in the 65th minute and Taylor then floated a 20-yard free-kick just wide two minutes later.
Substitute Theodore Whitmore forced a save from Marlon Beresford after Paul Hall's cross in the 78th minute, while Rowan Vine headed at Achterberg from 15 yards from Brkovic's cross with six minutes remaining.