Reid is a long term admirer of the ex-Newcastle left-back and spotted an opportunity to move in for the 24-year-old once it became clear PSG were willing to let him go and the player was keen on a return to English football.
Birmingham City had arranged a deal to bring him back to the Premiership on loan earlier this year following his two seasons with Newcastle, only to be rejected by the player. Domi has a chequered history having gone AWOL during his time at St James' and controversially telling the Magpies he no longer wished to play for them before re-joining PSG.
Reid had revealed on Friday that he hoped to make more additions to the squad shortly, of which Domi would be the first before he switches his attentions to an attacking player.
The Frenchman can play at left-midfield, or as shown during his time at Newcastle, an accomplished left-back. Reid is keen to strengthen the squad in both positions.
The former France Under-21 international joined Newcastle from PSG for £3.25m in December 1998, but returned to Paris in a £3m deal two years later after making over 50 appearances for the St James' Park club.
The player was a major loss to Bobby Robson's side, who said at the time of his defection: "He is a very good footballer and our best left-footed player. He has a beautiful left foot, he is quick, good in the air and we need him."