Taylor has taken control of the reins at the Sky Bet League One club in the wake of Martin Allen's surprise sacking on Sunday following 16 months at the helm.
Allen was dismissed as Gills lay 17th having claimed nine points from their 11 games this term, coming after last term's achievements in which he led the Kent outfit back to the third tier for the first time since 2010 by storming to the League Two title in his first campaign in charge.
Taylor, who led the Gills to promotion himself during one season at Priestfield in 1999/00, most recently agreed a two-month contract to take charge of England's Under-20 side during what was a miserable World Cup tournament in Turkey earlier this summer.
Gillingham chairman Paul Scally told the club's official website: "Further to the termination of the contract of Martin Allen as manager of Gillingham Football Club, I have received already a huge response from potential new candidates such that the process of considering a replacement manager is clearly going to take some considerable time.
"With that in mind, and based on my view that the playing staff require some immediate assistance to prepare for up and coming games, I contacted Peter Taylor this afternoon (Monday) to ascertain whether he would consider coming back to the club on an 'interim manager' basis pending a full-time appointment to be made in the weeks ahead.
"I am delighted that Peter has accepted this role and he will take responsibility for the team with immediate effect, meeting the management and players Tuesday morning, and taking charge of our game against Preston on Saturday and thereafter until a permanent appointment is made."
Taylor famously enjoyed a one-match caretaker spell in charge of England's senior side against Italy in November 2000 for which he handed David Beckham the captain's armband for the first time.
The 60-year-old has twice managed England's Under-21 team as well as the likes of Leicester, Brighton, Hull and Crystal Palace at club level.
Taylor also took charge of Bahrain's national team between July 2011 and October 2012.
- Sports & Recreation
- Martin Allen
- Gillingham Football Club
- Peter Taylor