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He has signed a five-year contract, and in accepting the role, has left his duties as Academy Director which he has fulfilled to distinction in the past three years.
The 36-year-old will take up the role immediately and will help the board decide on who should succeed Alan Pardew as first team manager. Indeed, many supporters believed that today's 4pm press conference was called so that the club could announce their new manager.
The role of 'Director Of Football' is a new one for Reading FC, no-one has ever performed such duties for the Berkshire side. However, as the club explain, Hammonds new role will see him: "responsible for all football matters other than first team and reserve team coaching and team selection."
Despite the clear declaration of Hammond's new role, it remains to be seen what difference his promotion will make to the overall running of the club. It is questionable whether such a change of job could ever directly affect results on the pitch.
Justifying his decision to promote Hammond Chairman John Madejski today declared: "Nicky has an intimate knowledge of the workings of this football club and has been instrumental in building towards what we are today.
"I have every confidence in appointing him our first-ever Director of Football, a new position which underpins the progress the Club is making and will also help us make the right decision when it comes to appointing our new manager."
Meanwhile, it is believed that a new manager will be in place before Saturday's visit to Sunderland. The club have now started interviewing candidates for the post, with those jostling for the role believed to include Ronnie Moore, Ian Atkins, Kevin Dillon, Tony Adams, Joe Kinnear, Steve Coppell, Steve Cotterill, Lawrie Sanchez and former Spurs boss Glenn Hoddle.