The winger is a product of the club's youth system and was the subject of much transfer speculation during the January transfer window.
But Oldham chiefs rejected a "substantial" bid and Taylor has now shown his commitment to the Latics by signing a new deal despite still having a year to run on his original contract.
Taylor told the club's official website: "I am delighted to have put pen to paper on my new contract and I would have signed for longer if I could.
"Everyone knows that Oldham is where I want to be - I love playing for the club and I want to help us into the Championship.
"There has always been a lot of speculation surrounding me but all I want to do is play for Oldham."