According to the Daily Mirror, Black confronted chairman Mick McGinnity yesterday morning over reports Reid was about to be brought into Highfield Road.
When McGinnity admitted that Reid's arrival was imminent, Black said there seemed little point in continuing and told the chairman to sack him immediately.
Reid has been out of football since he was sacked as manager of Leeds in November last year.
Former boss Gary McAllister, who brought Black to the club, said: "I am very surprised and there is no disguising that Eric is as well. I don't think he could have done any more considering the resources and the investment in the team."