The move is something of a homecoming for Head, who was on the Royals' books as a youngster.
Head, who also has coaching experience from his 10-year spell at Southampton, has joined from Fulham, where he was in charge of opposition and European scouting.
"Reading’s record in the transfer market is absolutely fantastic, a lot of credit must go to Steve Shorey and the boys who do a fantastic job," Head told the club’s official website.
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"It’s about improving on what we as a club are already doing."
Head’s main responsibility will revolve around European scouting, though he’s also been tasked expanding and improving Reading’s scouting network so it matches the standards set by their Premier League rivals.