The Irish international was red-carded after firing the all-important goal and then it was left to heroic home goalkeeper Gerrard to keep the lead intact.
Shaun Newton stepped up to take the resulting penalty, but Gerrard flung himself to the right to pull off a breathtaking save.
The goalkeeper was in inspired form to produce a string of world-class saves including the penalty stop to keep his side in the game after Reid was given his marching orders for bringing down Kenny Miller in the area.
Newton confirmed his team's lack of composure from penalty kicks by missing yet another for his Wolves side.
It was the same Reid who produced one of his memorable moments to fire his team into the lead four minutes before the interval, blasting into the roof of the net with the outside of his left foot from 18 yards.
Wolves staged a fierce onslaught on the Forest defence in the last 20 minutes, but the determination and bravery of the players in red was enough to secure Forest only their second win of the season, which was enough to leapfrog the visitors in the table.
The home side introduced key defender Michael Dawson as a second-half substitute for his first appearance of the season following a lengthy injury lay-off.
Forest would have sealed the match long before, but out of touch striker David Johnson was again misfiring and squandered three clear-cut first-half chances.
Miller was the only threat in the Wolves frontline, but his team-mates failed to provide any support in front of the home goal.