After days of indecision the highly-rated young boss, who led Conference side Exeter to a sixth-place finish last year, eventually decided to turn his back on the Grecians.
Dolan, a former West Ham player, replaces Brendan Rodgers as Academy boss as Rodgers has taken up a similar position at Chelsea.
Ex-Hammers boss Glenn Roeder was also reportedly in the frame for the position as head of the Academy, but Director of Football Nicky Hammond believes the Royals have got the right man to develop the Club's young players.
"Eamonn has great integrity and is an excellent coach. He has also got good leadership skills, and he is bright and ambitious. I feel he will perfectly complement the staff we currently have," said Hammond, speaking to the official site.
"He has an extremely good reputation within the game and I think he will bring so much to our Academy."
Meanwhile, the new Academy boss admitted that he snubbed offers from other clubs to stay at Exeter - but when the Nicky Hammond came knocking he couldn't resist making the switch to the Madejski Stadium.
"I was really happy at Exeter and had previously turned down several other offers. When I was asked to speak to Reading, I agreed to do so out of courtesy, but the way Nick Hammond sold Reading to me gave me an instinct that I had to come," said Dolan, speaking to the official site.
"With the new training ground, the stadium and the overall structure of the club, I quickly got the feeling that Reading is a very well-run football club and I couldn't resist the challenge of being a part of that."