The 25-year-old joins Brian McDermott's newly-promoted Royals on a three-year deal.
Like fellow new signings Pavel Pogrebnyak and Garath McCleary, Guthrie is a free agent and costs Reading nothing in transfer fees.
Ex-Nottingham Forest star McCleary also penned a three-year deal while Russian striker Pogrebnyak, 28, is likely to do the same when the ex-Stuttgart ace gains a work permit this week, having already agreed personal terms and passed a medical.
Guthrie put pen to paper at Madejski Stadium last Friday and the former Newcastle United player says he is delighted to be joining a 'family club.'
"It feels brilliant to have signed," Guthrie beamed. "It is a great honour and I am very excited.
"As soon as I met the manager and Nick Hammond (director of football) my mind was made up, it was a no-brainer.
"Reading Football Club is a fantastic, well-run family club and I'm so excited to be part of something special for this club."
Guthrie spent the early part of his career with Manchester United then Liverpool before moving to Newcastle United in 2008 after a loan spell with Bolton Wanderers.
He scored nine goals in 104 games for the Magpies, helping them win promotion from the Championship back to the Premier League in 2010 at their first attempt.
But he gradually lost his place in Alan Pardew's team and was released in June this year.
That put a string of rival clubs on red alert, but it was Reading who won the race to sign him.
"My representative had spoken to [other] teams," confirmed Guthrie. "But I sat down with the manager and within a week or two I'm here.
"I saw the team play last year and I was impressed. My aims are to play well, do my best for Reading. The Premier League is where everyone wants to be so the challenge this season will be to make sure we're still in there.
"I just want to do well and do my bit. I class myself as an experienced player and I ask more of myself each year."
Reading have followed Guthrie's progress for several years and were quick to pounce when he was released by the Magpies.
And Hammond believes the midfielder will only get better: "Danny is a player we have admired for a long time and we have been aware of him since he first broke into the Premier League at Bolton," he explained.
"He has great experience at this level, most recently for a massive club in Newcastle playing in front of big crowds on a regular basis.
"He is a good age, but still has a lot more to come with the best years of his career ahead of him."
McDermott also confirmed Guthrie is a signing for the future: "Danny brings good experience at a good age, he has real ability to pass the ball, he's got energy and he is what Reading is all about, a hungry player," he declared.
"We're looking to add players who we think will be good for us over a number of years, not just next season."
Reading are likely to make further summer transfers dealings amid links to Huddersfield Town striker Jordan Rhodes, Watford defender Adrian Mariappa, QPR defender Luke Young, Spurs defender Sebastien Bassong and Hull City's Robert Koren.
McDermott's first-team squad return from their summer break to start pre-season training at Hogwood Park on Thursday.