Reid, 28, has been signed on a permanent contract but the transfer fee is undisclosed.
He was out of contract with the U's in the summer and the Essex said have opted to sell now rather than risk losing him for nothing then.
The centre-back has been at Colchester since 2008, when he joined on a free transfer from Barnsley.
His time at the Weston Homes Community Stadium has been hit by injury, but he has played 65 times for the U's.
Ibrahim, 19, was born in Somalia but has represented Norway at U21 level.
He has made three senior appearances for Manchester City, having made his debut in the FA Cup fourth round win over the Iron last season.