Three goals in each half saw the Dons win 6-0, and the misery was compounded with the sending off of debutant Will Packwood.
Benik Afobe scored twice before half time, following Alli's opener after eleven minutes.
Afobe completed his hat-trick just before the hour, before Packwood's foul led to his red card and a penalty converted by Reeves.
The misery was completed on full time, as full back Lee Hodson curled home to make it 6-0.
U’s boss Tony Humes made three changes to the line up, bringing in Will Packwood for the injured Magnus Okuonghae, Elliott Hewitt for Sean Clohessy and Rhys Healey for George Moncur.
It was the home team that had the first sight of goal, in the second minute, but Kay’s header from a corner went safely over Sam Walker’s crossbar.
A minute later, it was the U’s on the attack, with Elliott Hewitt’s clever cross deflecting of a defender’s leg and off the far post.
In an open start to the game, both sides were wanting to get forward but it was the hosts that were dictating things more.
On eight minutes, Walker had to dive low to palm away another header but he was helpless three minutes later as MK Dons opened the scoring.
Gavin Massey headed a corner away but it only found Alli thirty yards out. The midfielder moved the ball forwards onto his right foot and drilled a low shot into the bottom corner.
The U’s tried to get back into the game but in quick succession, Freddie Sears and Rhys Healey were denied by good defending.
Those two attacks by the U’s were rare forays into the home side’s half and Karl Robinson’s promotion chasers went two up nine minutes before the break.
Baker threaded a lovely ball through the U’s defence and Afobe clipped his shot over the body of the diving Walker and into the net.
It was one way traffic at this stage and right back Hodson almost made it three following a good MK Dons move but shot narrowly over from just inside the box.
The third goal did come before the break though, when Afobe headed over Walker after the U’s keeper had palmed away a Baker shot.
For the U’s to have any chance of getting back in the game, a good start to the second half was needed but it was quickly evident that the Dons wanted more goals of their own.
Within four minutes of the restart, McFazdean hit the post with a near post flick from a corner and Reeves was just wide with his effort.
In a rare break for the U’s, Sears had a shot deflected straight into Martin’s arms but seconds later, Afobe shold have had his hat-trick but shot over when well placed.
The two sides exchanged attacks as two U’s shots were blocked before Powell shot over Walker’s bar at the other end.
Humes made his first change on fifty five minutes, bringing Craig Eastmond on for Alex Gilbey in a straight swap in midfield.
Two minutes later, it was four and Afobe had completed his hat-trick. He burst past Packwood and drilled a low left foot shot past Walker.
Packwood’s day became even worse on sixty five minutes, when he was sent off for fouling Afobe inside the penalty area, preventing a goalscoring opportunity.
Reeves stepped up and scored from the spot, making it 5-0 with twenty five minutes still to play.
Eastmond went back to centre half while the U’s prepared their defensive substitution, with Jamie Harney coming on for his debut in a difficult situation.
At the same time, Moncur replaced Rhys Healey to provide an extra body deeper for the U’s.
MK Dons played keep ball for long periods and didn’t put too much pressure on Walker in the U’s goal.
They were patient but were still creating odd chances, the best of which saw Craig Eastmond head off the goalline to prevent a sixth goal.
That sixth did come though, and it was the icing on the cake for the hosts and salt in the wounds for the U’s.
Full back Lee Hodson got forward on the left, cut inside and curled a lovely right foot effort into the top corner.
The result saw the U’s drop further into the relegation zone but attentions turn to the cup next weekend, with the game against Peterborough United.