Josh Carson's second consecutive goal at Portman Road wasn't enough for Town, as Reading struck with two late goals to leave Portman Road with all three points.
Daryl Murphy had given Town the lead early in the second-half, before Kaspars Gorkss equalised for the visitors.
Carson then put Blues back in front with 11 minutes remaining before late goals from Alex Pearce and Noel Hunt saw the Royals take all three points.
Paul Jewell made four changes to the side that lost to Forest last time out, with Murphy, Jay Emmanuel-Thomas and Keith Andrews all joining new signing Richard Wright in the starting line-up, David Stockdale out with a shoulder injury.
The 'keeper was making his first Town appearance since November 2009, where he helped Blues to a 2-1 away win against Cardiff.
The game started at a fast pace and the visitors almost took the lead within two minutes of the kick-off. Jimmy Kebe skipped away from Aaron Cresswell before whipping in a cross that Simon Church couldn't get on the end of from inside the six yard box.
Town responded after 12 minutes through Emmanuel-Thomas, who cut inside Ian Harte, but failed to keep his left-footed effort on target and the ball sailed wide of Adam Federici's goal.
The recalled Murphy also went close for Town with a long range effort, just a minute later, but Gorkss managed to get a block in and deflect the ball over Federici's goal and out for a corner.
Striker Hunt was looking lively for Reading with his direct running and he went close after 22 minutes with an acrobatic effort from a Jobi McAnuff corner that went just wide.
However the striker should have put the Royals in front just before the half hour mark when he connected with a Shaun Cummings cross, but the Irishman failed to get his header on target and the ball sailed wide with Wright scrambling across his goal.
That close call seemed to spark Town into life and Michael Chopra was agonisingly close to breaking the deadlock after 33 minutes. The striker got on the end of a loose ball and after holding off Gorkss managed to poke a shot past Federici but unfortunately saw his effort come back off the post and away from goal.
Emmanuel- Thomas reacted to the loose ball and crossed back into the box, where Chopra again got on the end of the cross, but saw his effort from close range blocked by Gorkss and the sides went in goalless at the break.
Into the second-half and the visitors again started the half looking the more dangerous. A Jem Karacan corner caused problems in the Town box and Blues were grateful that Kebe and Ian Harte got in each other's way and were happy to see the ball go behind for a goal-kick.
Town did respond quickly though, and on-loan midfielder Andrews was unlucky not to add to his five goal tally as his fiercely hit free-kick was well kept out by Royals stopper Federici.
However Town did make the breakthrough soon after. A Grant Leadbitter free-kick wasn't claimed by Federici and Murphy was on hand to score his first goal of the season, as he headed in from close range to put Town in front after 56 minutes.
Reading were still threatening on the break and after Church played in Kebe through on goal, the Mali international looked destined to score but for a superb last ditch tackle from Cresswell who denied the winger and diverted the ball out for a corner.
Hunt forced a fine save out of Wright soon after, with a dipping effort from wide on the right hand-side that the Blues 'debutant' did well to tip over.
However the visitors' pressure did eventually pay off as Gorkss equalised for the Royals after 76 minutes.The Latvian rose highest in the box to head home an Ian Harte free-kick past Wright and into the net.
Despite the setback, Town responded in the best possible fashion by retaking the lead just three minutes later.Murphy laid the ball back to Carson whose shot from just inside the area deflected off Pearce and looped over Federici into the back of the net.
Kebe remained a threat for the Royals out wide and when he set off on a mazy run towards the Town box, beating four players in the process, it took a fine tackle from skipper Leadbitter to stop the winger.
But the visitors did equalise for a second time and, for the second game running, Town were undone by a last minute goal. Defender Pearce connected well with a Harte corner and powered a header beyond Wright and into the top corner to bring the scores level.
And yet there was still more to come from the visitors as striker Hunt snatched it for Brian McDermott's side. Kebe's cross to the back post found Hunt who controlled well before firing past Wright and into the bottom corner to see Reading leave Suffolk with all three points.
Town: Wright, Edwards, Ingimarsson, Collins, Cresswell, Carson, Andrews, Leadbitter (Wabara 85), Emmanuel-Thomas (Martin 73), Murphy, Chopra (Bullard 80). Subs not used: Lee-Barrett, Scotland.
Reading: Federici, Cummings, Gorkss, Pearce, Harte, Kebe, Leigertwood, Karacan (Robson-Kanu 71), McAnuff, Church (Le Fondre 71), Hunt. Subs not used: Andersen, Manset, Tabb.