Sharp has been linked with a move to Reading for some time with Royals boss Nigel Adkins a big admirer having worked with him at Scunthorpe United and Southampton.
27-year-old Sharp has found himself out of favour at St Mary's and he does not figure in Mauricio Pochettino's first-team plans.
Sharp spent last season on loan at Nottingham Forest and he impressed at the City Ground, scoring 11 goals.
A number of Championship clubs are thought to have made enquiries, but Reading have won the race for his signature.
Sharp has agreed a three-month loan deal and will become the second new face at the club following the signature of former Fulham man Chris Baird on Friday.