The 23-year-old centre-back, who has signed a five-year-contract, will return to Reading and spend the remainder of this season on loan at the Madejski Stadium.
Hector, from London and a boyhood Chelsea supporter, began his career in the youth team at Millwall and moved to the Reading academy in 2009.
Having continued his development and gained crucial experience of first-team football out on loan, Hector made his Reading debut in January 2014 at the age of 21.
Last season, under the guidance of former Chelsea player and coach Steve Clarke, Hector established himself as a hugely important member of the Reading defence, making 49 appearances in all competitions and scoring three goals.