Taylor played four games in his debut season after being taken with the 36th overall pick in last year’s draft.
Sydney Executive GM of Football Charlie Gardiner said the club came to a decision after talks with the league, the AFLPA and Taylor’s manager.
“The situation Elijah and the club has found itself in is deeply regrettable. Elijah has made some very poor decisions which have led us to this point, and he acknowledges that,” Gardiner said.
“This is certainly not a position we have arrived at lightly, however Elijah’s actions could not be reconciled.
“It is obviously a sensitive situation and a legal process is still to play out, but in working with Elijah and his management, our collective view was that the right call for both Elijah and the club is to part ways. We have also consulted with the AFLPA and appreciate the support James Gallagher and his team has provided during the process.
“This has been an incredibly difficult situation for Elijah, his family, and those involved. We are keen to see Elijah receive ongoing education and support in the hope that he can mature and learn from this experience, make better decisions in the future, and take steps towards rebuilding his career.”
The Swans have stated they will make no further comment.