Taylor has been working at the agency on a consultancy basis since he left Leo Burnett last year, after its merger with D'Arcy.
His appointment is designed to make up for the gap left by the departure of the founding partner Amanda Walsh, who quit the agency last March.
Walsh's departure was seen as a blow for the agency as she was its public face and the driving force behind its new-business efforts.
Murray Chick, the chairman and planning partner at Walsh Trott, said: "We put on a lot of business during 2003, so it's hugely important to us that we found someone with both the track record and, maybe even more importantly, the right personality to join us."
Taylor worked at D'Arcy for 15 years, rising to the role of board account director on the Fiat account. He was also the group director on its COI Communications business and continued in this post at Leo Burnett.
Since leaving Leo Burnett, Taylor has worked as a consultant at Fallon and then at Walsh Trott, during which time he helped win the £5 million Modern Apprentices task from COI.
Chick added: "It's taken us several months, but anyone who meets Daniel can't fail to be impressed by his energy, enthusiasm and passion for the business and for the right kind of advertising."
Taylor said: "Walsh Trott Chick Smith is an agency with huge potential. It just needs a firecracker up its bum and I think I'm the fuse."