Brian McDermott has overseen a change of fortunes for the Royals since he took charge at the end of last year and his fluid attacking side were far too strong for Gary Johnson's disillusioned team.
Alex Pearce headed Reading ahead before exciting attacking trio Gylfi Sigurdsson, Jobi McAnuff and Jimmy Kebe all got on the scoresheet before half-time.
Shane Long added the fifth on the hour mark before Sigurdsson rounded out the win with his second.
Reading are full of confidence and took just three minutes to open the scoring.
Brian Howard curled in a corner from the right-hand side and Pearce got ahead of his marker to thump in a powerful header from close range.
Sigurdsson then saw a low shot well saved by Joe Lewis in the Peterborough goal as Reading pushed on for a second before Lewis clawed out a looping effort from McAnuff.
Pearce should have doubled the lead when he headed a free-kick wide from close range and Johnson had seen enough, replacing Exodus Geohaghon after just 16 hapless minutes.
But McDermott's side did grab their second in the 25th minute through the ice-cool Sigurdsson.
Ryan Bertrand was tripped in the area by Craig Morgan and Sigurdsson made no mistake to notch his 17th goal of the season.
Reading were strolling to victory and made it 3-0 in the 29th minute.
Sigurdsson unlocked the offside trap with a clever pass over the top and McAnuff ran through to convert.
Johnson made his second change, hauling off Gabriel Zakuani in a desperate attempt to stem the tide, but Reading still found a fourth before the break.
Again a long ball was good enough to beat the Posh backline as Andy Griffin lofted one over the top for Kebe to latch on to and provide a clinical finish beyond Lewis.
McAnuff and Bertrand both shot wide from 20 yards at the start of the second half before Long got in on the act.
The excellent Sigurdsson - who will surely be at the centre of a bidding war this summer - was the architect, rolling a perfect through-ball for Long to accelerate away from the defence and plant a shot into the corner.
Sigurdsson has emerged from the Royals' youth set-up this year to become one of the best players in the division and he made it 18 for the season with his second in the 76th minute.
Andy Griffin made a mazy run down the right and squared across the area. Long should have scored but somehow hit the bar from close range but Sigurdsson was on hand to tap in a simple finish.