Substitute Adam Le Fondre struck twice inside six second-half minutes as the Magpies imploded having dominated the opening 45 minutes.
Alan Pardew's men would have been out of sight by half-time had it not been for the heroics of keeper Adam Federici, but led only 1-0 courtesy of the returning Yohan Cabaye's superb 35th-minute free-kick.
But they wilted alarmingly after the break to lose a game they simply had to win in front of a disgruntled crowd of 49,411.
The Royals, who came from 2-0 down to beat West Brom 3-2 last week, left Tyneside having boosted their own survival hopes while significantly denting those of their hosts.
If ever there was a must-win game, this was it for Newcastle after a run of just two wins in 13 Barclays Premier League games which had seen them slide inexorably towards the scramble for top-flight survival.
Promoted Reading arrived on Tyneside as one of only four sides with a worse record than the Magpies, and therefore this was an opportunity the home side could not afford to let slip at the end of a difficult week.
Pardew thought he had landed Marseille striker Loic Remy, only to be gazumped at the death by QPR, and the battle to land the reinforcements Pardew so desperately needs, as well as that to retain the services of skipper Fabricio Coloccini, are ongoing.
But the presence of Mathieu Debuchy, making his home debut, and compatriot Cabaye, making his first start since November 11 after a groin injury, were causes for optimism.
Cabaye's return re-invigorated Newcastle, and it was from his fourth-minute free that they might have taken the lead when the ball fell to the feet of Mike Williamson 12 yards out.
However, the central defender slipped as he tried to steer the ball home.
The lively Sylvain Marveaux saw a 12th-minute shot blocked and Federici had to get down well to keep out Davide Santon's long-range effort two minutes later as the Magpies piled on the pressure.
The Australian excelled himself seconds later to keep out Cabaye's effort from a tight angle and reacted superbly to palm away Cisse's header.
However, the visitors should really have been ahead with 27 minutes gone when they launched a rare foray into enemy territory and Garath McCleary crossed low for Pavel Pogrebnyak, only for the Russian to slide his shot wide of the far post.
But it was largely one-way traffic and the luckless Cisse might have scored twice within as many minutes, but for Federici.
The keeper was in exactly the right place at the right time to claim the Senegal international's 28th-minute volley, although had the ball been a foot either side of him, it would have ended up in the back of the net.
Federici came to the rescue once again on the half-hour when Cisse ran on to Debuchy's perfectly-weighted cross and powered it towards goal, only to see the Royals last line of defence hold firm once again.
But the deadlock was broken 10 minutes before half time in glorious fashion after Marveaux had been tripped 20 yards out by Jobi McAnuff.
Cabaye stepped up to curl the resulting free-kick over the wall and into the top corner with Federici for once rooted to the spot.
It was little more than Newcastle deserved, but they headed for the dressing room at the break knowing the job was far from complete.
As if to illustrate the fact, Jonas Gutierrez was hugely relieved to see the ball fly just wide of the far post after he had attempted to cut out Ian Harte's 47th-minute free-kick with the visitors returning in determined mood.
The home side struggled to rediscover the fluency of their first-half performance, and that encouraged the Royals, who were taking a much more positive approach.
Pogrebnyak might have levelled after 62 minutes after Jimmy Kebe had headed down Danny Guthrie's cross, but he blasted high over.
Pardew moved to close the game down when he replaced Marveaux with the more defensively-minded James Perch three minutes later, but the ploy did not work and Reading forced their way back into the game with 19 minutes remaining.
Kebe was allowed time and space down the right and when Mike Williamson failed to cut out his cross, Le Fondre bundled the ball over the line.
There was worse to come from the home side six minutes later when they failed to deal with a ball into the box and Le Fondre pounced to thump it past the helpless Tim Krul.
Cisse fired wastefully over the top and substitute Gabriel Obertan forced Federici to make a late save in a desperate flurry, but there was no way back from beleaguered Newcastle.
Source: Newcastle United Mad