Let $A = \Bbbk Q / I$ be the path algebra of any finite quiver $Q$ modulo any two-sided ideal $I$ of relations and let $R$ be any reduction system satisfying the diamond condition for $I$. We introduce an intrinsic notion of deformation of reduction systems and show that there is an equivalence of deformation problems between deformations of the associative algebra $A$ and deformations of the reduction system $R$, the latter being controlled by a natural, explicit L$_\infty$ algebra. It follows in particular that any formal deformation of the associative multiplication on $A$ can, up to gauge equivalence, be given by a combinatorially defined star product, and the approach via reduction systems can be used to give a concrete and complete description of the deformation theory of $A$. For the polynomial algebra in a finite number of variables, this combinatorial star product can be described via bidifferential operators associated to graphs, which we compare to the graphs appearing in Kontsevich's universal quantization formula. Using the notion of admissible orders on the set of paths of the quiver $Q$, we give criteria for the existence of algebraizations of formal deformations, which we also interpret geometrically via algebraic varieties of reduction systems. In this context the Maurer-Cartan equation of the L$_\infty$ algebra can be viewed as a generalization of the Braverman-Gaitsgory criterion for Poincaré-Birkhoff-Witt deformations of Koszul algebras.

122 pages, 7 figures, v5 some changes in exposition and small correction in chapter 10