The 18-year-old striker will join the Royals for the season from Championship side Southampton to add depth in the forward position.
Ruben Selles admitted that he was hoping to add a couple of more players before the summer transfer window shuts and will link up with the Saints striker having managed there last season.
Ballard comes into the team just a day after 34-year-old forward Andy Carroll departed the club after triggering a clause to terminate his contract and complete a move to French side Amiens.
Ballard has impressed at youth level and has caught the eye in Premier League 2 this campaign by scoring six goals in three matches.
He also has three caps and three goals for England U18s.
Head of Football Operations, Mark Bowen, said: “Dom is a gifted young striker with a proven eye for goal – he has been prolific at both Under-18 and Under-21 level and has already taken his first steps in first team football at Southampton.
“Now, he has a platform to earn valuable experience, develop his own game in a highly competitive environment and simply score more goals at senior team level as a Royal. I’m delighted we have been able to bring him into the young, hungry squad we are building at Reading.”
