Taylor has been preferred ahead of Colin Slade for the first five-eighths role which became vacant after injuries to Daniel Carter, Aaron Cruden and Beauden Barrett.
Taylor and Colin Slade were called into the squad and while Slade has played 10 tests and been the Highlanders' five-eighths all year, the versatile Taylor has been preferred for Saturday's repeat clash with the Wallabies.
"He is mentally tough and plays the game with a lot of confidence and maturity," coach Steve Hansen said.
"These factors, along with his assured goalkicking under pressure, have made this an easy selection. We have every faith that he will handle the occasion with aplomb."
The 24-year-old Taylor will suit up in the most famous sporting club in New Zealand and join his father, who began his international career as a midfield back against the Lions in 1983.
The Taylors will be the 18th father-and-son combination to play for the All Blacks after another Crusaders product, lock Isaac Ross, who was chosen for the same honour as his locking father, Jock.
In 2012, Taylor played a stretch of five games as the backline director for the Crusaders to give them kicking options with Carter moving out a place. He has not been picked there since, with Tyler Bleyendaal chosen in Carter's absence.
However, Taylor's clear thinking, size and goalkicking expertise have persuaded the All Black selectors he is the better replacement.
Hansen had no doubt Saturday would be a tougher task for the All Blacks than they faced in Sydney.
"They will be hurting after that test and will throw everything at us. They will be looking to play with more accuracy and intensity so, therefore, we will need to meet - or better that - with a higher level of execution right across the board, if we are to be successful," he said.
Taylor was called away from a surfing holiday late last year to stand by for the All Blacks when they struggled with food poisoning in the week leading into their final test against England.
He did not make the field but that summons and training camp call-ups this year showed he was not far away from making the cut.
His Super 15 and ITM Cup rugby has been mainly at second five-eighths or fullback where his defence and goalkicking at about 90 per cent success have been valuable weapons.
While this will be Taylor's first test, loosehead prop Tony Woodcock, 32, will become the fourth player behind Richie McCaw, Mils Muliaina, and Keven Mealamu to play 100 tests for the All Blacks.
The injury absence of lock Luke Romano brings Brodie Retallick back into the starting XV for his 16th test at the Cake Tin with Jeremy Thrush coming back into the reserves for this test.
There have been a number of changes to the All Black bench.
Keven Mealamu, Ben Franks and Ryan Crotty have made way from those who were in the reserves in Sydney.
After proving his fitness for Wellington, Dane Coles is the deputy hooker, a recovered Wyatt Crockett is the deputy loosehead prop, Thrush the lock cover and with the backline changes, Charles Piutau comes as outside back cover instead of Crotty.
All Black squad:
1. Tony Woodcock, 2. Andrew Hore, 3. Owen Franks, 4. Brodie Retallick, 5. Samuel Whitelock, 6. Steven Luatua, 7. Richie McCaw - captain, 8. Kieran Read, 9. Aaron Smith, 10. Tom Taylor, 11. Julian Savea, 12. Ma'a Nonu, 13. Conrad Smith, 14. Ben Smith, 15. Israel Dagg. Reserves: 16. Dane Coles, 17. Wyatt Crockett, 18. Charlie Faumuina, 19. Jeremy Thrush, 20. Sam Cane, 21. Tawera Kerr-Barlow, 22. Colin Slade, 23. Charles Piutau.
