Taylor was a free agent after his contract expired at Newcastle, who were relegated to the English championship (second tier).
"Steven Taylor gives us a proven piece that can step into our backline and perform immediately," coach Caleb Porter told the club's website (www.timbers.com).
"His experience and leadership will be very important to our team down the stretch."
MLS Cup champions Portland Timbers, who lost to Sporting Kansas City 1-0 on Sunday, are seventh in the Western Conference standings.
(Reporting by Ian Rodricks in Bengaluru; editing by Sudipto Ganguly)
