The legendary 56-year-old has never been defeated since the World Series of Darts was introduced in 2013, claiming three previous Sydney titles and two Perth Darts Masters trophies in a 20-game unbeaten run.
He extended that to 24 matches and a fourth straight win in Sydney in a brilliant final day of this year's event, as he firstly swept past Dave Chisnall 11-4 in the semi-finals before edging out van Gerwen in a thrilling decider.
Taylor dominated his semi-final with Chisnall, leading 3-0, 7-1 and 10-2 before holding off a brief rally from his rival - who took out 66 and 70 - to book his spot in the final, averaging 102.47 and hitting five 180s.
Van Gerwen, meanwhile, overcame Peter Wright 11-6 with a brilliant 106 average as he finished 11 out of 13 darts at a double including his first eight without missing in a flawless opening as he took an 8-1 lead.
Wright took out 121 and 156 as he hit back to 8-4 with four perfect doubles of his own, but van Gerwen proved too strong as he held on for the win.
The final proved a tighter affair as van Gerwen opened with a 180 in an 11-darter before seeing Taylor come from 2-1 down to lead 4-2 and 5-3.
Van Gerwen then hit back with three legs of his own to move back ahead, landing a 104 checkout to edge 6-5 up and double eight to claim a 7-6 advantage.
Taylor again found a surge, levelling with an 11-darter, finishing double eight, 68 and 90 as he moved into a 10-7 lead, and though van Gerwen landed 180s in the next two legs to cut the gap and keep his hopes alive, the reigning champion held on to seal victory with double 16.
"This is brilliant and I'm so happy," said Taylor. "I thought it was a cracking final - I thought I had him and then he came back.
"I always get in front of him and he seems to come back at me, but I thought 'you're not going to get me this time'. That's the only way to beat Michael, by fighting and being aggressive.
"I'm going to pat myself on the back because it was a fantastic game.
"Sydney's been great this week - it's been fantastic at The Star and it's been perfect for me. I got my preparation right and I've got my darts right. I'd love to play here every week!"
Taylor will now set his sights on retaining the TABtouch Perth Darts Masters title at the PCEC from August 25-27, having been victorious in Western Australia for the past two years.
"I'm going to go for it and I'm on a high," admitted the 56-year-old. "I'm really looking forward to Perth and I want to carry this forward now.
"Michael been storming it and he's setting the bar, but he's in for a battle now and I'm after him. I'm not putting myself under pressure and whoever plays me now is going to have to play well to beat me."
Van Gerwen had previously been defeated by Taylor in the 2013 final in Sydney and was aiming to pick up his maiden World Series of Darts win in Australia, only to miss out narrowly.
"Full credit to Phil, he had a fantastic tournament and the crowd saw a great final," said van Gerwen. "You can't afford to miss against Phil in this form and I tried to come back, but fair play to Phil because he was better than me tonight.
"I think I played well but I made a couple of little mistakes and if you're playing against Phil in this form he punishes you.
"I can only blame myself and you can't win all the time but it hurts. Last night I played fantastic and I feel great, and it's been a fantastic week here and I'll prepare for Perth now."
Wright had won through to his first World Series final of the year by defeating Australia's Simon Whitlock and Rhys Mathewson, while Chisnall was unable to repeat the form which had seen him overcome Harley Kemp and Adrian Lewis as he missed out on a spot in a maiden World Series decider.
The PDC World Series of Darts now moves across Australia for the TABtouch Perth Darts Masters, which will be held at the PCEC from August 25-27, live on Fox Sports. Tickets can be purchased through www.downunderevents.com.au.
Ladbrokes Sydney Darts Masters
Saturday August 20
Phil Taylor 11-4 Dave Chisnall
Michael van Gerwen 11-6 Peter Wright
Best of 21 legs
Phil Taylor 11-9 Michael van Gerwen
Best of 21 legs
Phil Taylor v Dave Chisnall
1-0 - Both players initially miss two darts at doubles before Taylor returns to land double two to lead.
2-0 - Taylor breaks throw, landing a 180 and double 16.
3-0 - Chisnall hits a 180 but misses two more darts at double top, allowing Taylor in to finish 64 on double eight to continue his strong start.
3-1 - Taylor opens with a 177, but misses darts in two visits to claim a fourth straight leg, and Chisnall steps in to finally land tops to get off the mark.
4-1 - Taylor scores 140, 180 and 165, with Chisnall landing a 177 in reply to leave 24 only to see his rival finish double eight for a 13-darter.
5-1 - Double two gives Taylor a fifth leg.
6-1 - Double top sees Taylor claim a third straight leg.
7-1 - The pair trade 180s before Taylor finishes 121 on the bull to move six legs clear.
7-2 - Chisnall takes out 84 on double 12 to hit back.
8-2 - Taylor fires in his fourth 180 of the game before breaking throw for a fourth time by finishing 82 on tops.
9-2 - Taylor finishes 64 on tops for a 14-darter to move two legs away from the final.
10-2 - Chisnall opens with a 180, but Taylor lands a maximum of his own before taking out 84 to move to the brink of the final.
10-3 - Chisnall lands his fourth maximum, and when Taylor misses two darts at double six for the match the St Helens ace finishes 66 on double 18 to keep his hopes alive.
10-4 - Chisnall finishes 70 to continue his revival.
11-4 - Taylor finishes 81 on double 12 for a 12-darter to complete the win and remain on course for a fourth straight Sydney win.
Michael van Gerwen v Peter Wright
1-0 - van Gerwen opens the game with a 180 before finishing double eight for a 13-darter.
2-0 - van Gerwen finishes 76 on tops to claim the second leg against the throw.
3-0 - Wright leaves 40 as he bids to get off the mark, only to see van Gerwen finish 84 on the bull.
4-0 - van Gerwen's superb start continues as he takes out 114 on double 18.
4-1 - Wright nails double top with his first dart at a double as he finally gets off the mark.
5-1 - Double 12 sees van Gerwen continue his flawless display of finishing.
6-1 - van Gerwen now takes out 90 on tops to move five legs clear.
7-1 - The world number one finishes 122 on tops as he takes a six-leg advantage, remaining clinical with his doubles.
8-1 - For the second time in three legs, van Gerwen finishes 90 with a combination of two outer bullseyes and tops.
8-2 - The pair trade 180s before Wright hits back on double five.
8-3 - Wright takes out 121 on double 18 to continue his revival.
8-4 - A brilliant 156 finish from Wright sees him win a third successive leg, maintaining his own flawless record of 4/4 doubles - with van Gerwen still 8/8.
9-4 - van Gerwen posts a 180 before missing a double for the first time in the game, but Wright is unable to capitalise on tops as the Dutchman returns on double two.
9-5 - Wright posts double three to hit back.
10-5 - Double ten moves van Gerwen a leg away from the win.
10-6 - Wright opens with his second 180 before finishing double eight to keep his hopes alive.
11-6 - van Gerwen lands a 177 before taking out tops to seal his place in the final, hitting 11 doubles from 13 attempts and averaging almost 106 in a stunning performance.
Phil Taylor v Michael van Gerwen
0-1 - van Gerwen opens the final with a 180 before finishing 76 for an 11-darter to make a brilliant start.
1-1 - Taylor lands a 180 of his own before hitting double ten to level.
1-2 - van Gerwen finishes 56 on tops to move back ahead.
2-2 - Taylor opens with a 180 before landing tops to square the game.
3-2 - van Gerwen misses two darts at tops, and Taylor returns on double 16 to secure a break of throw to move ahead for the first time.
4-2 - Double 14 sees Taylor move two legs clear.
4-3 - van Gerwen opens with a 177 score before finishing a third-dart tops to claim his first leg in four, with Taylor waiting on 24.
5-3 - The pair both open with 180s before Taylor finishes 44 on double on double 16 to move two legs up again.
5-4 - Taylor kicks off with a 177, with van Gerwen missing the bull for a 170 finish only to see his rival miss two darts at double 15, allowing the Dutchman back in on double eight.
5-5 - van Gerwen lands a 180 and also leaves 32 with a 170 score before finishing a third-dart double 16 to break throw and level.
5-6 - van Gerwen moves back ahead by finishing 104 on double 16.
6-6 - van Gerwen hits a fourth 180 of the game, but misses two darts at double 16 to move two legs clear as Taylor returns on double eight to level.
6-7 - Taylor misses two darts at tops to break throw, and van Gerwen returns from a missed bullseye to land double eight.
7-7 - Taylor lands a 177 score before finishing 69 on double six for an 11-darter to square a high-quality match, with both players averaging above 100.
8-7 - Taylor misses double 16 to finish 131, but returns on double eight.
9-7 - Taylor opens with a 177 before punishing van Gerwen's missed bull for a 170 checkout by finishing 68 on tops.
10-7 - Taylor finishes 90 on double 15 to move a leg away from claiming a fourth successive Sydney triumph.
10-8 - van Gerwen opens with a 180, and is given a reprieve for two missed doubles when Taylor wires tops for the title, allowing the world number one back on double nine to stay in the game.
10-9 - van Gerwen's sixth 180 of the game kicks off the leg before double top sees him reduce the gap to one leg.
11-9 - van Gerwen continues his challenge with a seventh maximum, but Taylor lands double 16 to secure a fourth successive Sydney Darts Masters win.