The 24-year-old rejected a move to Cardiff City in order to stay with the Royals.
He said that the arrival of manager Nigel Adkins last season and the style of football that he has adopted has convinced him to stay in Berkshire.
"I'm delighted to sign a new contract and it's a fantastic feeling to commit my future to Reading Football Club," he told the club's official website.
"Towards the end of last season there were a lot of positives to take - the new manager coming in, the style of football we began to play, and this is obviously a club looking to get back into the Premier League and stay there.
"The manager has shown a lot of faith in me and the style of football he is getting the boys to play is going to be exciting but effective as well. The only direction the club is looking to go is upwards and I can't wait for the season to start now."
Reading snapped Robson-Kanu up after he was released by Arsenal at the age of 15.