He grew up with 12 older sisters. In high school Taylor failed to pass a required course in mathematics, and he dropped out of school at age 17.

Taylor attended the United States Merchant Marine Academy in World War II and earned a commission as an Ensign in the United States Navy. He was recalled to the Navy during the Korean War.

Taylor also worked as a Hollywood Press agent for many years.

Taylor came up with idea of the plot for The Cay while conducting research at the Coast Guard archives for his 1958 non-fiction book Fire on the Beaches. Taylor read an account of a Dutch ship being Torpedoed by the Germans in 1942. The majority of the survivors crawled into a lifeboat, but one 11-year-old Dutch boy (Phillip) swam to a raft that had been launched by the force of the torpedo impact. A German submarine surfaced between the lifeboat and the raft, preventing the occupants of the lifeboat from attempting a rescue of the boy. By the time the submarine left, it was dark and the raft was no longer visible to the occupants of the lifeboat.

For the next decade, Taylor pondered the ordeal of the boy on the raft. During walks along the beach, Taylor would look out to the Atlantic Ocean horizon and imagine the boy holding on to the raft and praying for rescue.

The Cay, Taylor's fictionalized account of the boy on the raft, took only 3 weeks to complete, and has become perhaps the most beloved of his young adult fiction novels. It has seen worldwide sales in the millions. Taylor based the character of the boy in his book on a childhood playmate. "The one thing I remembered about [him] was that his mother had taught him to hate black people and to hate them with a passion," Taylor once told a reporter from the Los Angeles Times. In the book, the boy sheds his racist views as he learns to admire and respect the black man who rescues him from the ocean. For a short period of time The Cay was banned and was classified as racist, but this was a gross mischaracterization, as this book involves a child discovering the folly of racism. Taylor dedicated the book to Dr. Martin Luther King Jr.