The flamboyant 26-year-old has joined the club on a free from Russian side Alania Vladikavkaz, in a two year deal with the option of a third.
Drenthe returns to England after a brief loan spell with Everton in the 2011/12 season, where he notched up four goals and eight assists in 27 appearances.
After beginning his career at Feyenoord he joined Real Madrid in a deal worth £12m in 2007, and was loaned out to Spanish second division side Hercules in 2010 as well as Everton in 2011.
The Dutch international is one of Reading's biggest transfer coups and is Nigel Adkins' second signing of the summer, following the capture of Wayne Bridge on a free transfer from Manchester City.
The Royals begin their Championship campaign with a home match against Ipswich Town on August 3, before taking on Bolton Wanderers, Watford and Blackpool.
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