Taylor spent the last three years at Sheffield United where he made 40 appearances before being released by the Blades in the summer.
The 26-year-old defender began his career at Blackburn Rovers, progressing through the youth ranks while also representing England at Under 19 and 20 level.
Loan spells at QPR, Blackpool, Crewe, Huddersfield and Tranmere followed, with the latter signing him on a permanent basis.
After impressing for Rovers, Taylor sealed a move to Bramall Lane in 2009 where he held down a regular place during United's Championship campaign.
He will go straight into the Saddlers' squad for this evening's trip to Queens Park Rangers for the second-round Capital One Cup clash.