Le Fondre joined the Royals from Rotherham United in August 2011, scoring 12 goals in his debut season to help Brian McDermott's side win the Championship.
The 25-year-old believes that putting pen to paper on fresh terms is a statement that he is confident in his ability to make the grade in the Premier League.
He told the club's official website: "From a personal level this deal is great for me. I have always had the self-belief that I can play at the highest level and I really appreciate that Reading feel the same.
"I think it shows just how far I have come since signing with Reading from Rotherham, the club are now trying to establish themselves in the Premier League and stay up this season."
Le Fondre scored Reading's first goal of the season on the opening day of the campaign, a late equaliser in a 1-1 home draw with Stoke City.