Reed was known for his alcoholism and binge drinking. Numerous anecdotes exist, such as Reed and 36 friends drinking, in one evening: 60 gallons of beer, 32 bottles of scotch, 17 bottles of gin, four crates of wine, and a bottle of Babycham. Reed subsequently revised the story, claiming he drank 106 pints of beer on a two-day binge before marrying Josephine Burge: 'The event that was reported actually took place during an arm-wrestling competition in Guernsey, about 15 years ago; it was highly exaggerated.' In the late 1970s, Steve McQueen told the story that in 1973, he flew to the UK to discuss a film project with Reed who suggested that the two of them visit a London nightclub. They ended up on a marathon pub crawl throughout the night, during which Reed got so drunk that he vomited on McQueen.
Reed became a close friend and drinking partner of The Who's drummer Keith Moon in 1974, while working together on the film version of Tommy. With their reckless lifestyles, Reed and Moon had much in common, and both cited the hard-drinking actor Robert Newton as a role model. Sir Christopher Lee, a friend and colleague of Reed, commented on his alcoholism in 2014: 'when he started, after [drink] number eight, he became a complete monster. It was awful to see.'