The Royals have been searching for a new boss since they sacked Brian McDermott two weeks ago, and former Southampton manager Adkins is the man they have opted for.
The 48-year-old had been out of work since surprisingly losing his job with the Saints in January, with his sacking coming after back-to-back promotions.
Long-time assistant Andy Crosby will join Adkins at Reading and the pair will take the team to Arsenal on Saturday before a home meeting with Southampton.
Royals owner Anton Zingarevich agreed the deal with Adkins on Monday night and is happy to have got his man.
"I am delighted to bring Nigel to our club because he is perfect for us," the Russian said in a statement.
"He has great respect within the game, his CV speaks for itself and he has many attributes as a manager, he is progressive, he develops players, his teams play attacking, passing football but most of all he knows how to win games at all levels.
"This is an appointment we have made both with the short and long-term in mind and Nigel can take our club forward.
"I know our supporters have been keen to hear news over the past two weeks and I am certain they will join me in saying it was worth the wait.
"I wish Nigel and Andy nothing but good luck and now we focus on eight hugely important games in the Premier League.
"Our supporters will also play a vital part in the finale to the season and I am certain Nigel will get an excellent reception from our fans at the Emirates on Saturday."