The 22-year-old England under-21 spent last season on loan at Celtic, where he won a Scottish League winner's medal.
Reading manager Jaap Stam, formerly a defender with United, said Blackett's versatility was a key factor in the move.
"He can play as a left-back or a left-sided centre-back; he has got great potential in the sense that he is quick and athletic, defensively he is strong and he is good at set pieces," Stam told Reading's website (www.readingfc.co.uk).
"As a defender he can go and play high up the pitch as well, and that is what we need in the squad."
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
(Reporting by Simon Cambers; Editing by Clare Fallon)
