Alan Pardew resigned from the First Division side, and the Royals wanted Tigers boss Taylor for the role. However, he's said his future is with Hull City, although he was "flattered" by their interest.
City chairman Adam Pearson said in a statement: "I am obviously delighted that Peter has shown such loyalty and commitment to the club at a particularly important period in Hull City's redevelopment and I really look forward to working with him for many seasons to come."