The Royals booked their place in the last 16 of the prestigious competition with a straightforward 4-0 win over npower League One side Sheffield United.
McDermott has taken the Berkshire club to the quarter-finals on two occasions since he took over, claiming some famous scalps like Everton and Liverpool on the way.
He has also become a master at getting the best out of his teams in the second half of the season, and appears to be working his new year magic again with the club now on a four-match winning streak.
That run has created a huge boost in confidence at Reading, and for that reason their manager sees no reason why his team cannot reach what would be only their second cup semi-final in history.
"There's a buzz around the place at the moment and that comes from winning games," McDermott said.
"If we can win another game we're in the quarter finals - and we've been there before and we'll try and go one further again.
"The only thing that mattered was going through (yesterday)."
Many had earmarked this fixture as a potential upset, but even though McDermott made six changes to his side, they rarely looked like losing.
Noel Hunt took advantage of being handed a rare start by scoring twice, while Garath McCleary and Mikele Leigertwood also chipped in with a goal apiece.
McDermott was pleased to have been given a selection dilemma ahead of Wednesday's game against Chelsea, and praised the unity of the Royals squad which will be key to their attempts to stay in the Barclays Premier League.
"Individuals are irrelevant in comparison to the group and we all feel the same way," the Reading boss said.
"The lads who weren't playing today were in the dressing room after delighted, because at the end of the day we are all doing the best we can to make sure Reading do as well as we possibly can in the cup and league.
"That is the only thing that matters."
Although McDermott has been pleased with his team's form of late, he admits he may bring in some new faces before the transfer window shuts on Thursday night.
"There may be. We have a couple of things that we could possibly do," he said.
"We will see. We might be the ones that are trying to do things last minute. We never normally do that, but that would be quite nice, quite exciting, getting something done at 10.50pm on Thursday."
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