The 25-year-old former Newcastle player completed his medical on Friday and will formally complete the move on Sunday.
Royals chairman Sir John Madejski said: "I would like to welcome Danny to Reading and wish him every success here."
Guthrie found first team openings hard to come by at Newcastle last season following a pre-season knee injury and the arrival of Cheick Tiote.
Guthrie told his new club's official website, www.readingfc.co.uk: "It feels brilliant to have signed, it is a great honour and I am very excited.
"As soon as I met the manager and Nick Hammond my mind was made up, it was a no-brainer. Reading Football Club is a fantastic family club, well run and I'm so excited to be part of something special for this club."
Director of football Hammond said: "Danny is a player we have admired for a long time and we have been aware of him since he first broke into the Premier League at Bolton.
"He has great experience at this level, most recently for a massive club in Newcastle playing in front of big crowds on a regular basis. He is a good age, but still has a lot more to come with the best years of his career ahead of him."
Manager Brian McDermott added: "We're delighted Danny has signed for us. He brings good experience at a good age, he has real ability to pass the ball, he's got energy and he is what Reading is all about, a hungry player.
"We're looking to add players who we think will be good for us over a number of years, not just next season, adding to the players who have already done fantastically well for us."