The 23-year-old has put pen to paper on a two-year contract at Bramall Lane, after joining the League One club for an undisclosed fee.
Blades manager David Weir told the club's official website: "Lyle will be a great addition to our squad. He is young, hungry and scored plenty of goals at Falkirk last season.
"We have fought off competition to secure his signature and we are delighted he has chosen to join Sheffield United."
Taylor netted 24 goals in 34 Scottish First Division starts last season.