The Royals skipper has been the subject of much transfer speculation this summer with Premier League side Wolves having already seen a bid rejected for his services, believed to have been in the region of ?3million. Stoke are also thought to be keen.
Reading were understood to be demanding ?4million for Mills, who scored in May's 4-2 Championship play-off final defeat to Swansea at Wembley.
With their valuation met, the 24-year-old defender could now be on his way to the King Power Stadium as Foxes boss Sven-Goran Eriksson continues his summer rebuilding programme for an assault on promotion from the Championship.
A statement on Reading's official website read: "Reading defender Matt Mills has travelled to Leicester City after the two clubs agreed a fee for the player's signature.
"With a fee agreed, the Leicester-born centre-half expressed an interest in speaking with City and those discussions are now under way."
Eriksson has been looking to construct a squad capable of challenging for promotion to the Premier League and has already signed the likes of Kasper Schmeichel, Lee Peltier, Sean St Ledger and David Nugent this summer.
The Leicester boss missed out on Craig Mackail-Smith earlier in the week and will hope for better fortune in trying to persuade Mills to move to the King Power Stadium.
The 24-year-old joined Reading from Doncaster Rovers two years ago and he has made over 70 appearances during his time with the club.
Source: Team Talk
Source: Team Talk