Carroll left Newcastle in the close-season after his second spell with the Tyneside club produced only eight Premier League appearances in two years.
The 32-year-old was without a team at the start of this season but has now agreed to link up with second tier Reading until at least mid-January.
"This is a deal which we have been working on for some time and are confident it is the right move for both player and club," Reading manager Veljko Paunovic told the club's website.
"Andy is looking for a new challenge in his career and we need a player with his quality and vast experience.
"So this is a great match and I'm really looking forward to working with Andy over the next couple of months."
Carroll was Liverpool's then record signing for £35 million from Newcastle in 2011.
But he endured an injury-plagued spell at Anfield, scoring only six goals in 44 league appearances.
Carroll, who has also played for West Ham, won nine England caps between 2010 and 2012, scoring twice.
He could make his Reading debut against Nottingham Forest on Saturday.
Standout matches today