Long said: "The last year has been brilliant for me. I feel like I've really progressed since joining Reading last summer and I'm delighted to sign this new deal.
"Like the rest of the boys, I can't wait for the new season to start. It's going to be a big learning curve for me, and I'm looking forward to the challenge."
Director of football Nick Hammond added: "Shane is a truly outstanding prospect and this signature is very good news for Reading Football Club. It is important that we've protected such a prodigious talent.
"Shane made a great impact last season, and there is a massive test in front of him in the Premiership this season but we have great faith in his abilities."