The Irish left-back's previous deal was set to expire this summer, but he has now extended his stay at the Madejski Stadium until June 2013.
Harte turns 35 in August, but he is still likely to feature regularly for the Royals next season as they return to the top flight for the first time in four years. That is the same length of time for which former Leeds United player Harte has waited for another crack in the competition, having last played in it during a one-year spell at Sunderland.
"It's a dream come true to go back to the Premier League," Harte told the club's official website. "Two years ago the manager took a chance on me and gave me the opportunity to come to a fantastic club like Reading. And I've had two of the best years of my career here.
"I'm absolutely delighted. Now that it's all sorted, I can go away and enjoy the summer, thoroughly look forward to next season and come back raring to go."
Two seasons ago, Harte was playing in League One at Carlisle, but Reading picked him up as a free agent in the summer of 2010. He has since been named in the Championship Team of the Year twice after helping the Royals win promotion as winners of the Championship a year after losing the play-off final to Swansea City.
Manager Brian McDermott added: "It's a fantastic story, if you consider that two years ago Ian had been written off in certain quarters, and yet now he is a Premier League player again."
"That tells you everything you need to know about the person, the player, his resilience, his character, his determination and his quality. He still has that burning desire in training every day to play at the highest level."