Taylor, a former England caretaker manager, will be assisted by Tottenham Hotspur coach Chris Ramsey.
Taylor has had two spells in charge of the England's U21 team, firstly between 1996-1999 before he returned for a second spell in 2004-2007.
"I am very pleased and I am looking forward to it," Taylor said. "I remember watching the 1997 U20 World Cup in Malaysia with Howard Wilkinson and I know what a big tournament it is.
"Michael Owen played in that one and it just shows how big the tournament is and the type of player it attracts - Lionel Messi has twice won player of the tournament before.
"I just hope we can get the best players available to go out there and do well. The experience is the most important thing.
"Any level under the senior team is about readying players for that moment. This tournament will be good for young players."
Taylor has been working in Holland with FC Twente, but the Dutch club have agreed to release him early from his contract.
The finals are taking place in 10 Turkish cities between 8 June and 13 July.
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