Katy was trailing 24-21 when Taylor broke free on his long scoring run with 6:46 remaining. Taylor's 42-yard TD run with 1:55 left clinched the Tigers' seventh state championship and their first since consecutive titles in 2007-08.
Katy (16-0) is tied with Abilene, Brownwood and Plano for the third-most championships in Texas history. Celina and Southlake Carroll have eight apiece.
Laquvionte Gonzalez had 117 yards receiving and Damion Hobbs threw two touchdown passes to Brandon Harris for Cedar Hill, which scored twice early in the fourth to take the lead before Katy rallied.
Cedar Hill (11-5) was playing in its first championship game since winning the title in 2006.
Taylor powered a Katy ground attack which gained 355 yards on 46 attempts.
Katy won 11 games by at least 35 points this season. Cedar Hill, however, gave Katy a stiff challenge late.
On the first play of the fourth quarter, Hobbs converted on fourth down with a 24-yard touchdown run on a quarterback keeper that cut Katy's lead to 21-16.
On Cedar Hill's next possession, Hobbs threw a screen to Gonzalez, who took the short pass 55 yards. That set up Hobbs' 21-yard TD to Harris, who caught the ball between a pair of defenders in the back of the end zone. Hobbs' two-point conversion run gave Cedar Hill a 24-21 lead with 9:22 left.
Katy faced fourth-and-1 on its next drive and gave the ball to Taylor, who ran untouched down the right sideline 56 yards and a 28-24 lead.
Katy defensive back Quinn Atwood dashed Cedar Hill's upset bid when he intercepted Hobbs near midfield with 3:49 left.
Taylor scored again four plays later, a 42-yard TD run that made it 35-24. Taylor, who has committed to Nebraska, finished the season with 2,750 yards and 42 touchdowns rushing.
Hobbs was 11 of 23 passing for 200 yards. The senior quarterback also rushed for 83 yards on 21 carries.
Katy made special teams mistakes on its first two drives of the game, botching a snap on a 24-yard field goal attempt and losing a fumble on a fake punt near midfield.
Cedar Hill kicked a field goal to open the scoring before Taylor answered with TD runs of 1 and 17 to give Katy a 14-3 lead in the second quarter.
Gonzalez took a screen pass and raced 62 yards down to the 6. Three plays later, Hobbs floated a 9-yard TD pass to Harris to make it 14-10 with 1:57 left in the first half.
Cedar Hill had a chance to take the lead before halftime when it recovered a pooch onside kick at the Katy 24. But Cedar Hill didn't get a first down and Brooks Ralph missed a 38-yard field goal.