The 35-year-old midfielder, was handed a free-transfer by Villa at the end of the season and had been on the look-out for a Midlands side to extend his disguinshed career with.
"I’m pleased to be here. I only had to see the stadium, training ground and the facilities, no-one had to twist my arm," Taylor told the Rams official website.
"I wouldn’t say it was my choice to leave Villa but I am looking forward now and my Villa days are history.
"This club belongs in the Premiership. I live in the area and know a lot of Derby fans who have been egging me to sign so now I hope I can repay their faith in me".