The versatile 27-year-old, who can play as a right-back as well as a centre-back, was a prominent feature of the Rams’ back four under McClaren last season. However, Shotton has fallen out of favour under Paul Clement this season, making just one start and a further six cameo appearances from the bench.
Shotton becomes the second defender to leave the iPro Stadium this month, following Alex Pearce, who joined Bristol City in a similar deal, out of the door in the Midlands.
The former Non-League man passed a medical on Thursday and is in line to make his first appearance for the Blues against Sheffield Wednesday on February 6.
The deal, as it is understood, does not include any option for Gary Rowett to purchase Shotton at the end of his loan spell and the Englishman is expected to rejoin Derby in the summer.