Taylor was in charge of the England side from 1990 to 1993, overseeing the team's 1992 European Championship campaign, in which they were knocked out in the group stages.
Taylor eventually resigned as England boss in November 1993 after the team's failure to qualify for the 1994 World Cup, finishing his time in charge having won 18, drawn 13 and lost seven of his 38 games at the helm.
"With the greatest sadness, we have to announce that Graham passed away at his home early this morning of a suspected heart attack. The family are devastated by this sudden and totally unexpected loss," read a family statement.
Taylor led the Hornets from the old Fourth Division to the top flight in just five years, finishing second behind champions Liverpool in their debut season in the First Division to record their highest ever finish. Watford also reached the final of the 1984 FA Cup under Taylor, losing 2-0 to Everton at Wembley.
Taylor then moved to recently-relegated Aston Villa and helped them bounce back to the top flight at the first time of asking before also leading them to a second-placed finish in the First Division.
That led to his appointment as England boss, after which he went on to manage Wolverhampton Wanderers before returning for second stints at both Watford and Aston Villa.
During his return to Watford he once again steered the club up from Division Two to the Premier League, becoming just the third manager to oversee 1,000 league games in English football in the process.