Piazon, 21, joined Chelsea in January 2012 from Sao Paulo and has since had loan spells at Malaga, Vitesse Arnhem and Eintracht Frankfurt.
The Brazilian has featured twice in the Capital One Cup and made one appearance in the Premier League.
"Lucas is a very talented attacking player who can create chances and score goals," Reading manager Steve Clarke told the club's website.
"I was impressed by both his maturity and desire to prove himself in English football after some loan moves to European leagues.
"I'm sure Lucas will bring something extra to our squad this season."
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Reading have signed Chelsea forward Lucas Piazon on a season-long loan.