The 31-year-old forward signed a one-year deal at the Keepmoat Stadium last summer following a successful trial.
Boss Grant McCann had high hopes that Taylor could play a key role but he failed to break into the side. He scored one goal in 19 appearances and started just three games for Rovers.
The former Peterborough United and Bradford City frontman's contract has now been terminated following discussions with McCann.
Rovers are also lockedÂ in similar talks with right back Mitchell Lund whose path to the first team is blocked by Niall Mason, Matty Blair and recent loan arrival Aaron Lewis.
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'Paul had a chance to go to another League One club but he didn't feel it was right for him,' said McCann ahead of his side's home game with Burton Albion.
'So I had a conversation with him to say to him I wanted to give him the best possible opportunity to go and play some games.
'Tayls has been so unfortunate. Seventy two per cent of our goals have came from Alfie May, John Marquis, James Coppinger and Mallik Wilks.
'It's difficult for him to get in so we both agreed to mutually terminate his contract and he goes and finds another club.
'I've had the same conversation with Mitchell Lund,' he added.
'Opportunities are limited for Mitchell.
'I'm waiting to hear back from him. He wants to speak to his agent.
'I've told him January's the best time to be a free agent, and not the end of the season, because there's hundreds upon hundreds of players out of contract at the end of the season.
'But it's up to Mitchell to make that decision.'
Meanwhile, youngsters Cody Prior (Nuneaton), Max Watters (Gainsborough) and Myron Gibbons (Ossett) are all set to rubberstamp loan moves away from the Keepmoat Stadium.