The 27-year-old is reunited with Royals boss Nigel Adkins, who managed him at St Mary's and also at Scunthorpe.
Sharp has scored 140 career goals but has not made an appearance for Southampton since August 2012, his last action coming in a loan spell with Nottingham Forest last season.
Nevertheless he will go straight into the Reading squad for Saturday's visit of Birmingham.
- Sports & Recreation
- Nigel Adkins