Mr Taylor's announcement made it clear he had been pushed and attention is now focused on fellow board member Murray Valentine, who told the Otago Daily Times his future was a "discussion between me and the council".
Both men were involved in the controversial alliance between Queenstown and Auckland airports, publicly announced in July.
In his statement, Mr Taylor announced his resignation was effective immediately, indicating the Queenstown Lakes District Council has bowed to public pressure.
He said a resolution was passed at a recent extraordinary council meeting to remove him from the board if he did not "agree" to resign within seven days.
"Accordingly, I have tendered my resignation to the company, effective immediately." Mr Taylor told the ODT he had known for "a couple of weeks" his future with the board was in doubt, but was "surprised" when he was officially told last Friday he was "no longer required".
It is understood three recent meetings of the council have been held to discuss Mr Taylor's future - there were extraordinary council meetings held on March 24 and April 8, and a final public-excluded session of the council held at the end of its ordinary meeting in Queenstown on Tuesday.
Queenstown Lakes Mayor Vanessa van Uden said there had been "a lot of controversy" surrounding the issue and it had been a "difficult time" for the council and QAC.
"We want to see that the airport's position is consolidated. "We are proud of it; it's strong and we think it's well positioned for the future benefit of the community." Ms van Uden said the council wanted to "thank Mark" for his contribution.
She said there were "no other directors under the gun" and she had spoken to the remaining three directors, including Mr Valentine, and assured them they were not in danger of being removed.
Mr Taylor's departure is the latest chapter in the contentious, nine-month saga.
The deal, in which QAC created and sold a 24.99% new shareholding to Auckland for $27.7 million, will be examined by the High Court at a hearing scheduled for next month.
Air New Zealand and the self-appointed Queenstown Community Strategic Asset Group, which formed soon after the airport companies announced their strategic alliance, filed independent, but related, applications in the High Court at Invercargill, both seeking a judicial review.
The ODT reported last week the council had spent more than $400,000 to date on legal fees and litigation costs as a result.
While the strategic asset group has made no secret of its desire to see the resignations of the board at large, when contacted yesterday it issued a terse statement: "Another step in the right direction; no further comment at this stage."
On July 16, former mayor Warren Cooper told the ODT the board was in a situation where it should "either resign or tell the public why as a board they didn't keep the shareholder ... totally aware of what was going on".
The ODT also obtained a brief to councillors presented by the group on November 22, 2010, which urged the council to "assert yourself as shareholder" and "change the airport corporation board to take control".
It is understood, of the board members, there were two resignations the group was most keen to see tendered - those of Mr Taylor and Mr Valentine.
Mr Valentine was appointed to the QAC board in December 2009 pending the retirement of Mr Davies and Ian Farrant from the board.
When contacted yesterday, Mr Valentine said he was aware of Mr Taylor's forced resignation, but would not comment on his own future with the QAC.
He confirmed he had spoken to the council but was "not at liberty to say" what the discussions regarded.
However, there have been rumblings in Queenstown for several weeks indicating yesterday's statement from Mr Taylor could well be part of a bigger deal.
Sources told the ODT last month about a possible deal, being brokered by the strategic asset group, the council, Air New Zealand and both airport companies, involving the resignation of Mr Taylor and Mr Valentine from the QAC board; the cancellation of the subscription agreement by which Auckland could increase its shareholding to between 30% and 35%; and legal bills for all parties being paid by Auckland Airport.
In return, the High Court action would be abandoned. But Air New Zealand and the strategic asset group have forged ahead with the litigation.
Air New Zealand had "nothing further to add" yesterday, but the airline appears unlikely to back down from the fight to overturn the original share deal.
Counsel for the strategic asset group Frazer Barton told Justice John Fogarty at a hearing on March 17 in the High Court at Wellington his client was acting "in the public interest".
It has been suggested, if the group pulled out of the litigation at this point, the public could be forgiven for thinking it had struck a closed-door deal itself.
Many questions remain despite the mayor's reassurance, including how safe Mr Valentine's position on the board is and what the future will hold for QAC chief executive Steve Sanderson.
