The Scotland international, who signed a new contract with the Rams last January, will be with the Royals until the end of the season.
Martin has made 25 appearances for Derby in all competitions this season but has been limited to five league starts.
The arrival of Norwich City forward Cameron Jerome earlier this month pushed the 29-year-old further down the pecking order.
Upon confirmation of the deal, Jaap Stam told the official Reading website: "With the large number of games still to play this season, it was important to strengthen the attacking options available to us with a player who can add to what we already have within the squad.
"In Chris Martin, we have a striker who has proven his goalscoring ability at the clubs he has played for in the past and hopefully he can give us an extra impetus going forward and score goals for us."
Martin has made 186 appearances for Derby since joining from Norwich in 2013 and has scored 63 goals in total for the East Midlanders.