Hector signed a new deal last year but the Royals have moved swiftly to tie down the 22-year-old centre-back after he impressed in his first full season in the first team.
London-born Hector has made 49 appearances for Reading since joining the academy as a trainee in 2009.
“It’s a really positive step for me to sign another deal at Reading and to know that you’re wanted by the manager and the club, it’s a great feeling,” Hector said on the club’s webstie. “This is a proud moment for me and my family.
“I want to play week in, week out in the Championship again next season and hopefully I can do well and, as a team, we can improve on last year. That’s the aim.”
Manager Steve Clarke added on ReadingFC: “Since I came to the club in December 2014, Michael’s performances have improved almost from game to game. For a young defender to show such consistency of performance is great to see.
“However it was his work day in, day out on the training ground that impressed me the most and has shown me that Michael can have a big future in the game.
“This contract is a reward for the improvement shown and I’m looking forward to working with Michael in the coming season when, hopefully, he will continue on the same path.”