Reading's director of football Nick Hammond told the club website: "He's an outstanding goalkeeper.
"And thanks to his loan spell at Yeovil, he has already gained a lot of experience in league football."
Hammond continued: "If he continues to work hard and improve he has a very bright future."
McCarthy, who has previously spent loan spells at Team Bath, Aldershot and Woking, added: "I progressed a lot last season and went out on loan and played quite a few games.
"I haven't been fortunate enough to play a game yet but I'm hoping top get some time in the match on Tuesday (for England Under-21s against Uzbekistan).
"It's a nice feeling to be the only player in the squad from outside the Premier League but it just goes to show what you can do."
Source: BBC Sport
Source: BBC Sport