Taylor has penned a three-and-a-half-year deal at the Reebok Stadium after passing a medical and agreeing personal terms.
Bolton manager Gary Megson said of his latest capture, "Matt is a quality player who is very versatile on the left hand side. He is a proven Premier League performer who will bring additional quality to our squad."
"He has attracted interest from a number of clubs and I am delighted that we have managed to bring him to the Reebok Stadium."
Meanwhile, Wanderers defender Lubomir Michalik could be on his way out of Bolton after reports claimed he was on the verge of £300,000 transfer to Leeds United.