The Royals led 2-1 in the second period, but Elmira outscored Reading 4-1 the rest of the way to tally a 5-3 victory Wednesday night at the Sovereign Center.
David Vallorani, Stanislav Galiev and Nikita Kashirsky netted the trio of goals for the Royals.
Reading still leads the Eastern Conference. They also have a comfortable cushion atop the Atlantic Division.
The Royals will visit Elmira on Friday night.