The 29-year-old agreed a deal to play his football at the Madejski Stadium next season after a successful meeting with Alan Pardew this afternoon.
Danny Wilson revealed that the deal has gone through after months of discussions between the Robins and the Royals.
Speaking to bcfc.co.uk Bristol City manager Danny Wilson revealed: "Everything is done and Scott is now a Reading player. We wish him well and have to look to the future without him."
Reading will pay an initial £400,000 for the former Aston Villa man, but the fee could rise to £650,000 depending on appearances and how well the Royals perform. Aston Villa will net £125,000 from the deal, due to a sell on clause that was put in when Murray joined City in 1997.
Pardew has been chasing Murray all summer and had already had two bids rejected before Bristol City chairman Steve Lansdown eventually decided to let his club's star man go.
Murray is expected to be a regular next season and should make the right-wing spot his own. The signing is an excellent one as the 29-year-old scored twenty-seven goals last season. He should be able to add much needed firepower to the Reading frontline.
It is not known how long Murray has signed up for, although it is believed to be for three years. The Scotsman is expected to be allocated the number seven shirt which is vacant following Anthony Rougier's departure.
However, these details are yet to be revealed as no official announcement from Reading Football Club has been made. We hope to bring you Alan Pardew's comment as well as full details of the transfer as soon as possible.
Reading fans have waited impatiently for months now for the Royals to announce their first new signing. People had began to fear that we would fail to sign anyone this season so understandably the news has come as a welcome relief.
Just like buses, we wait ages for one and two (or more) could come along at once. The Royals will now aim to finalise deals to bring David Connolly and Richie Partridge to the club as Alan Pardew attempts to mount a serious bid for automatic promotion to the Premiership this coming season.
Reading were further bolstered by the news today that Ricky Newman has signed a new deal keeping him at the club for a further year.