The 18-year-old centre-back has made just two appearances for the Hammers this season - both in their Europa League qualifiers in August
Royals chief executive Nigel Howe told the club's official site: "Reece was a player who was wanted on loan by a number of clubs and we are absolutely delighted to have secured his services for the remainder of the season.
"He is young, but hungry for success and I am sure he will prove an excellent addition to our squad and learn a lot during his spell under Jaap Stam at Reading."
Oxford became the Hammers' youngest ever player at 16 years and 198 days in July 2015 when he played in a Europa League qualifying win over FC Lusitanos
He then became the second youngster Premier League starter when he helped West Ham beat Arsenal 2-0 in August 2015.
Source : PA