Going into Tuesday night's game knowing a draw would suffice in their battle to avoid the drop, it looked as though they had spurned their opportunity when Reading surged into a two-goal lead thanks to Alex Pearce's volley and a Gylfi Sigurdsson penalty.
But Scunthorpe produced a late rally that typified their endeavour, to sensationally draw level as Gary Hooper's close-range finish and a deflected Matt Sparrow effort sent Glanford Park into raptures and kept the Iron in the Championship.
The draw means that Scunthorpe go into the final two games of the campaign, contemplating back-to-back seasons in the second tier for the first time in 46 years.
For Reading it will feel like a defeat and ends any faint hopes they harboured of gate-crashing the play-off positions as they can no longer overhaul sixth-placed Swansea.
With both teams desperate for points for differing reasons, there was an open start to proceedings as both had early efforts.
Royals skipper Brian Howard was in the thick of the action for his side as he drove a 20-yard effort inches wide of the post before curling a free-kick just over, while Scunthorpe midfielder Grant McCann had a free-kick of his own saved by Adam Federici.
The goalmouth action continued and Reading created a fine opportunity to open the scoring on the half hour.
Jimmy Kebe broke down the right, got to the byline and pulled back for Sigurdsson who inexplicably blazed over from eight yards.
The hosts were full of endeavour but struggled in the final third with star attraction Hooper - fresh from a hat-trick at the weekend and under the scrutiny of Barclays Premier League managers Iain Dowie and Mick McCarthy - having an off day.
But Scunthorpe finally got behind the visitors' backline in first-half stoppage time when Garry Thompson's cross found Martyn Woolford, whose controlled volley evaded Federici and bounced back off the crossbar.
Scunthorpe were denied by the woodwork again within a minute of the restart as McCann whipped in a wicked free-kick from the right, which skimmed off the top of Federici's bar.
And in an action-packed start to the second period, Reading took the lead immediately after when Pearce volleyed home after Simon Church had climbed highest from Howard's free-kick.
The set-back roused the home side and Hooper missed a perfect opportunity to show potential suitors his value by squandering a gilt-edged chance.
After a fine passing move, Paul Hayes fed Hooper in on goal, he rounded Federici but, from six yards and with the goal gaping, he shot wide while off balance.
But they were unable to capitalise on their momentum and fell further behind with 20 minutes remaining.
A fine Sigurdsson pass fed in Jobi McAnuff and just as he was about to shoot, Scunthorpe skipper Cliff Byrne felled the winger from behind.
Byrne was lucky to escape with a yellow card, but Sigurdsson dealt out harsher punishment by squeezing the resulting spot-kick under the dive of Joe Murphy.
Scunthorpe gave themselves hope in the final 10 minutes when Hooper hooked in from six yards after Thompson's shot was too hot to handle for Federici.
And, in a frantic finale, their safety was confirmed when Sparrow's 89th-minute deflected effort from 16 yards went in.