The 20-year-old frontman arrives to boost a Shrews forward line which has managed just 15 goals in 15 league games this term.
Ugwu, who will remain at the Greenhous Meadow until January 2, is an Academy graduate at the Madejski Stadium but has not yet made a first-team appearance for the Royals.
He did, however, spend the majority of last season on loan at Yeovil and then Plymouth Argyle, managing a combined total of three goals in 24 outings.
Shrews boss Graham Turner told the club's official website: "I've been chasing Gozie for some time and it's pleasing to have finally been able to secure his services.
"I had hoped to bring him in on loan earlier this season having watched him play for Reading's Under-21s but he did so well that night Reading wanted to hold on to him for a while longer.
"I've continued to keep a close eye on him and Gozie gives us another attacking option. He's a good addition to the squad."