The 38-year-old Northern Ireland international, who has been at St Andrew's for six years, has extended his stay for a further 12 months.
Taylor has made 238 appearances for the club, will act as back-up to Ben Foster who recently joined the Blues from Manchester United for a reported fee of ¦pound;6million.
Manager Alex McLeish told bcfc.com: "He is nearing the age of 40, like David James, but he is in superb condition. I need Maik to drive Ben on in training along with (goalkeeping coach) Dave Watson."
He added: "Maik has almost got to be like a trainer as well and I can also see him becoming a future coach."
Blues acting chairman Peter Pannu added: "Club President Carson Yeung and I both endorse Alex's view that Maik deserves the new deal because of his experience and loyalty and feel there is still so much the club can benefit from with his continued service."
Source: PA
Source: PA