Transverse magnetohydrodynamic (MHD) waves permeate the solar atmosphere and are a candidate for coronal heating. However, the origin of these waves is still unclear. In this Letter, we analyze coordinated observations from Hinode/Solar Optical Telescope (SOT) and Interface Region Imaging Spectrograph (IRIS) of a prominence/coronal rain loop-like structure at the limb of the Sun. Cool and dense downflows and upflows are observed along the structure. A collision between a downward and an upward flow with an estimated energy flux of 107–108 erg cm−2 s−1 is observed to generate oscillatory transverse perturbations of the strands with an estimated ≈40 km s−1 total amplitude, and a short-lived brightening event with the plasma temperature increasing to at least 105 K. We interpret this response as sausage and kink transverse MHD waves based on 2D MHD simulations of plasma flow collision. The lengths, density, and velocity differences between the colliding clumps and the strength of the magnetic field are major parameters defining the response to the collision. The presence of asymmetry between the clumps (angle of impact surface and/or offset of flowing axis) is crucial for generating a kink mode. Using the observed values, we successfully reproduce the observed transverse perturbations and brightening, and show adiabatic heating to coronal temperatures. The numerical modeling indicates that the plasma β in this loop-like structure is confined between 0.09 and 0.36. These results suggest that such collisions from counter-streaming flows can be a source of in situ transverse MHD waves, and that for cool and dense prominence conditions such waves could have significant amplitudes.