Reid famously passed on working with GaGa on his Island Def Jam label early in her career, later explaining that he was simply having a "bad day".
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The X Factor judge has now told The Ellen DeGeneres Show that he initially told GaGa that she would "change music", but soured on the artist after listening to a demo tape weeks later.
"I said, 'You know what? This is disgusting'… and I dropped her and I dropped [her A&R guy]," he explained.
Reid then admitted: "It was the biggest mistake I ever made in my life."
GaGa revealed last year that her 'Marry the Night' music video is based on her experiences of being rejected by Reid and other record executives.
Reid has famously guided the careers of many popular artists, including Avril Lavigne, Pink, Justin Bieber and Rihanna.
Watch LA Reid discuss dropping Lady GaGa on The Ellen DeGeneres Show below:
