Defender Ryan Astles' superb low left-foot volley completed City's comeback after Rovers had been reduced to 10 men for the final half hour.
But Rovers still climb a place to third after maintaining their unbeaten National League run under Micky Mellon.
Andy Cook opened the scoring with his 11th goal of the season to put Tranmere ahead in the 30th minute.
He outmuscled visiting left-back Johnny Hunt for an aerial ball, controlled on his chest and fired an angled right-foot volley from 18 yards, which Chester keeper Alex Lynch only got a hand to.
Six minutes later, it was 2-0 as Lynch was beaten at his near post by Ben Tollitt's low angled left-foot drive.
After Kane Richards lashed his powerful shot against the underside of the hosts' bar just before the break, Tom Shaw then headed one back after meeting a ball from Ryan Lloyd six minutes into the second half.
But, after home midfielder Tollitt was sent off for his second bookable offence, after going down in the box looking for a penalty, Chester wasted a string of chances to equalise, before Astles struck a minute into injury time.
Match ends, Tranmere Rovers 2, Chester FC 2.
Second Half ends, Tranmere Rovers 2, Chester FC 2.
Blaine Hudson (Chester FC) is shown the yellow card.
Goal!  Tranmere Rovers 2, Chester FC 2. Ryan Astles (Chester FC).
Kane Richards (Chester FC) is shown the yellow card.
Lee Vaughan (Tranmere Rovers) is shown the yellow card.
Substitution, Tranmere Rovers. Adam Mekki replaces Jake Kirby.
Scott Davies (Tranmere Rovers) is shown the yellow card.
Substitution, Tranmere Rovers. Michael Ihiekwe replaces Andy Mangan.
Second yellow card to Ben Tollitt (Tranmere Rovers) for a bad foul.
Goal!  Tranmere Rovers 2, Chester FC 1. Tom Shaw (Chester FC).
First Half ends, Tranmere Rovers 2, Chester FC 0.
Craig Mahon (Chester FC) is shown the yellow card.
Ryan Astles (Chester FC) is shown the yellow card.
Goal!  Tranmere Rovers 2, Chester FC 0. Ben Tollitt (Tranmere Rovers).
Goal!  Tranmere Rovers 1, Chester FC 0. Andy Cook (Tranmere Rovers).
Ben Tollitt (Tranmere Rovers) is shown the yellow card.
Jay Harris (Tranmere Rovers) is shown the yellow card.
First Half begins.
Lineups are announced and players are warming up.
Chester came back from two goals down to claim a local derby draw against Tranmere Rovers at Prenton Park.