Why is the word "bread" pronounced "bred"?

In older varieties of English bread was pronounced with a long vowel. The spelling "ea" here represents a Middle English pronunciation with/ε:/, which was shortened to /ε/ in various words; not only "bread," but also "threat" and "breath." This shortening did not follow a completely consistent pattern, but it seems it was especially common before certain sounds such as "d," "t" and "th" (which all are classified phonologically as alveolar or dental obstruents). Modern spelling does not always perfectly reflect the historical vowel either, though: "red" historically had a long vowel, but today we write it with "e" and not with "ea." This is mentioned on page 2 of the following handout about the Great Vowel Shift from Anthony Kroch's website.