Bannan, who arrived at Hillsborough on a free transfer in September, was named in the Championship's divisional team of the year after helping Wednesday into promotion contention.
When fit and available, the Scotland international has started in every league game for the Owls, having appeared just seven times for Palace in last season's top flight.
And according to Rotherham boss Neil Warnock, who was Bannan's manager at Selhurst Park, Wednesday are a good fit for the 26-year-old.
"I had Barry Bannan at Crystal Palace - he wasn't quite good enough for me," Warnock told BBC Radio Sheffield. "We fell out a bit there because I didn't play him but then I left and he didn't get played again either.
"Players find their home really and he's wanted at Sheffield. The crowd love him, and you can see he's flourishing all the time. I think it's a good fit."
Bannan, who was promoted via the Championship play-offs while on loan to Blackpool six years ago, will hope to replicate those exploits with Wednesday this month.
The Owls are guaranteed sixth place following last weekend's victory against Cardiff City and will learn the identity of their semi-final opponents on Saturday afternoon.
Carlos Carvalhal's men can only face Middlesbrough or Brighton & Hove Albion, who face each other at the Riverside with second place at stake.