After retiring as a player, Barnes had a brief stint as head coach of Celtic in 1999–2000, working alongside Kenny Dalglish. He took over as manager of the Jamaica national team in 2008, but resigned six months later to become manager at Tranmere Rovers. He was sacked by Tranmere in 2009, after a series of poor results that saw the club make one its poorest starts to a season in its history.
An Anfield legend, Barnes was voted by Liverpool fans at number five in their 2006 poll of 100 Players who shook the Kop. A year later in 2007, FourFourTwomagazine acclaimed Barnes as the best Liverpool player of all time.