The lightweight fighter lost 15-10 to vastly experienced former Italian world champion Domenico Valentino at the ExCel, with two tight rounds before Taylor lost the final round 7-3.
The Scotsman, who became the first British boxer to bow out of the Games, was left disappointed but is now targeting gold in Glasgow in two years’ time.
“I am going to go to Glasgow in 2014 and go one better than I did in Delhi,” said the 2010 Commonwealth silver medallist.
“I'm obviously incredibly disappointed after all the hard work, and support I've received, that I couldn't deliver a win today.
"I wanted to build on the silver I got in Delhi. Valentino deserved his win – I've got to re-assess and reflect on what's happened tonight.”
Taylor’s coach Lee Pullen felt his charge failed to follow the game plan, but accepted that the Italian was a challenge too far.
He said: “Obviously Josh is very disappointed because his Olympic dream is over. He wavered away a little bit from the tactics. Fair play to Valentino, he got it right on the money.
"Valentino is a bit of a spoiler. They know each other as they've boxed before and I think the result was similar to last time.
“There was a three or five point deficit then. He's a tricky customer and he knows his way around the ring. Valentino wins and goes on but we have no complaints."
- Domenico Valentino
- The Scotsman