Reid has signed a one year rolling contract at the club, described by Leeds chairman John McKenzie as 'incentive based'.
McKenzie said at the press conference to confirm the appointment: "Over the past few weeks I have come to know Peter well. I have found he is not only a very good football manager, but also a great manager of people and we shall want to use his skills widely within Leeds United.
"I feel it is important as we drive the business forward to get Peter and the playing staff working more closely with the marketing areas and the development of the club.
"Leeds United is a great club that has to succeed on the football pitch.
"Failure is totally unthinkable. As such Peter's contract will be one of the most heavily incentivised in the UK football world."