The Town’s 11-match unbeaten home run in League One at Kenilworth Road came crashing down as Reading staged a dramatic late comeback to seal victory.
The Hatters had fought back from a goal down to deservedly lead eight minutes into the second half thanks to goals from Nigel Lonwijk and George Saville.
However, the Royals rallied and visiting striker Kelvin Ehibhatiomhan struck twice in the space of four minutes in the closing stages to complete his hat-trick and break Hatters hearts.
After booking their place at Wembley in the Vertu Trophy on Wednesday, the Town hoped a positive result against their fellow promotion chasers could pave the way for another visit under the arch.
Jack Wilshere made seven changes to the side that saw off Northampton on Wednesday but the Hatters got off to the worst possible start when Reading took the after five minutes.
Izzy Jones made a hash of a headed clearance and Ehibhatiomhan beat Kal Naismith to the ball before converting from close range past Josh Keeley.
The response from the Town was good. Emilio Lawrence shot wide, Devante Cole poked a shot at goal and Jordan Clark saw a shot charged down.
Keeley needed to be alert to deny a low effort from Kamari Doyle but back came the Hatters and Clark arrowed a strike goalwards that clipped the top of the crossbar on 22 minutes.
Six minutes later the visitors needed a clearance off their own line after goalkeeper Joel Pereira punched a corner towards his own net but the Town then needed their keeper to prevent the Royals doubling their lead on 33 minutes when Keeley saved smartly from Doyle again.
As half-time approached, while the Town were playing well, the visitors continued to create chances and Keeley thwarted Doyle for a third time with a tremendous fingertip save on 39 minutes.
But the Hatters upped the ante, and their efforts were rewarded in first-half stoppage time. Lawrence seized on a loose ball from a half-cleared corner on the right and swung in a devilish cross to the back post that Lonwijk poked home to make it 1-1.
The Town started from where they left off at the start of the second half and within eight minutes of the restart they were in front. Clark’s left-wing corner found the run of Saville and he nodded home from six yards for his first goal since August.
Ahead the Hatters were beginning to play with confidence and verve. Substitute Nahki Wells saw a deflected effort crash off the crossbar, Liam Walsh shot over the bar from the edge of the box and Clark skewed wide.
However, as the final 10 minutes approached the Town hit the self-destruct button as disaster struck.
Ehibhatiomhan levelled when Joe Johnson was dispossessed allowing Matt Ritchie to cross for the striker to bundle home from close range.
And within three minutes the Royals completed the turnaround to stun Kenilworth Road when Ehibhatiomhan completed his hat-trick. Ritchie robbed Naismith 10 yards from goal and the striker slotted past Keeley to cue pandemonium in the away end.
Dazed by the sucker punch there was no way back for the Hatters despite six minutes of added time and Wilshere’s men were left to reflect on what might have been.
The need for league points continues on Tuesday at Doncaster. We’ll see you then.
Town: Keeley, Jones (sub Morris 88), Lawrence (sub Bramall 78), Lonwijk, Naismith, Johnson, Saville, Palmer (sub Kodua 78), Richards (sub Walsh 66), Clark, Cole (sub Wells 66).
Subs not used: Shea, Odoffin.
Attendance: 11,375, including 1,311 from Reading


