Wilkins, 50, who spent nearly two years as Brighton manager before being sacked in 2006, teams up again with Royals boss Nigel Adkins, who he worked with at Southampton.
Adkins told the club's official website: "I'm delighted we've been able to bring Dean in to join us.
"We had an excellent working relationship; myself him and Andy Crosby over the last couple of years and he has a wealth of experience.
"He is an excellent coach and I'm sure he can help keep improving our players."
Wilkins, younger brother of former England international Ray Wilkins, made more than 400 appearances as a player, mainly with Brighton but also with Finnish side MyPa and PEC Zwolle in Holland.
He spent almost 20 years at Brighton as player, coach, caretaker-boss and manager and joined Alan Pardew in 2009 as coach at Southampton, who he helped win back-to-back promotions from League One to the Premier League.