Reid received his B.S. in physics from the University of Maryland, College Park, and then worked in industry for five years before entering graduate school at Carnegie-Mellon University, where he was awarded a PhD in Computer Science in 1980. From 1980-1987, he was an assistant professor of electrical engineering at Stanford University. During this period he and colleagues built the first Cisco router and founded Adobe Systems. Denied tenure, he was immediately hired by the Digital Equipment Corporation where he eventually became director of the Network Systems Laboratory. He experimented with electronic publishing with his USENET Cookbook project. His laboratory created the first firewall in 1987 and the first high-powered internet search engine, AltaVista, in 1991. In 1987, he and John Gilmore created the alt. hierarchy on usenet.
In 1999 he moved to Bell Labs' Silicon Valley site. In February 2001, he left and taught at Carnegie Mellon University until June 2002, after which he became Director of Operations at Google. He was fired in February 2004, nine days before Google's IPO was announced, allegedly costing him 119,000 stock options with a strike price of $0.30, which would have been worth approximately $10 million at the $85 IPO price. Reid sued Google for discrimination on the basis of age and disability. (He was 52 years old and had been diagnosed as having diabetes while at Google.) The Santa Clara Superior Court initially ruled against him. On October 4, 2007, the California Sixth District Court of Appeal overturned the lower court's verdict and allowed the lawsuit to proceed. The California Supreme Court has now agreed to review the case. Since July 2005, he has worked at the Internet Systems Consortium, where he holds the post of staff scientist.