Reading 2 Aston Villa 0
Sidwell, linked with a move to Villa Park in the summer, is out of contract at the end of the season and his value almost certainly rose another notch with this match-winning display.
A first-half header and an injury-time clincher earned Reading their first ever win over Villa, who had won all five previous league encounters between the sides.
But the visitors should have been ahead after only ten minutes when the Reading defence stood still as Shaun Maloney sent over a teasing cross and Ashley Young escaped from Ivar Ingimarsson only to send a free header harmlessly wide.
Instead, it was Reading who edged ahead on 16 minutes. Villa failed to pick up Sidwell lurking on the edge of the area and the midfielder ran in unmarked to flick home Glen Little's corner at the near post.
Leroy Lita nearly doubled the lead within three minutes when another Little cross picked out the England Under-21 striker whose thumping header was straight at keeper Thomas Sorensen.
Reading's period of total dominance was largely down to the form of Little down the right flank. The former Burnley winger's tricky footwork was making new-boy Maloney look silly - and a mockery of Gareth Barry's England claims at left-back.
But Reading's failure to add to Sidwell's opener meant their advantage remained a slim one and Villa often looked dangerous on the counter-attack.
Midfielder Maloney, having had such a torrid time defensively, came closest to getting Martin O'Neill's side back on level terms, but his power-packed left-foot chip was superbly pushed away by Reading's previously redundant keeper Marcus Hahnemann.
As Reading failed to clear the corner properly, John Carew's shot on the turn forced Hahnemann to block again, this time with his legs, and suddenly Reading were holding on to their slender lead.
The Royals had the ball in the back of the net three minutes into the second half, though Sidwell was correctly ruled to have bundled Sorensen and the ball over the line from a Lita centre.
But Villa nearly scrambled a controversial equaliser ten minutes into the second half. Young's shot deflected off Carew and against a post and, as Reading stopped anticipating an offside flag against Carew, Gabriel Agbonlahor reacted quickest, forcing a remarkable point-blank stop from the impressive Hahnemann.
Young, struggling to justify his £9million price tag, was then booked for a clumsy tackle on Reading captain Graeme Murty, before fluffing another header when unmarked in front of goal.
Villa, much improved in the second half, were looking increasingly capable of an equaliser, but Reading, in a reversal of first-half roles, looked a danger on the counter attack.
And a swift break eight minutes from time should have seen the home side put the game beyond reach. Hahnemann's pinpoint clearance sent substitute John Oster scampering down the right and his low centre found Lita, only for the striker's first touch to let him down and allow Sorensen to bravely smother his shot.
But Sidwell finished Villa off in stoppage time when he played a quick one-two with substitute Dave Kitson on the edge of the area and applied a clinical side-foot finish that gave Sorensen no chance.