The appeals chamber of the Special Court for Sierra Leone upheld the 65-year-old's 50-year sentence for 11 counts of war crimes and crimes against humanity including terrorism, murder, rape and using child soldiers.
It said Taylor's financial, material and tactical support made possible horrendous crimes against civilians.
Taylor's conviction in April 2012 was hailed as ushering in a new era of accountability for heads of state. He was the first former head of state convicted by an international war crimes court since the Second World War.
Taylor, wearing a black suit and gold-coloured tie, showed little emotion as he stood while presiding judge George Gelaga King read the unanimous verdict of the six-judge panel. He is expected to serve his sentence in the UK.
Elise Keppler, of Human Rights Watch, said: "Taylor's conviction sends a powerful message that those at the top can be held to account on the gravest crimes."
Steven Rapp, ambassador for war crimes issues at the US department of state - and former prosecutor at the Sierra Leone court - said the ruling "sent a clear message to all the world that when you commit crimes like this there will be a day of reckoning".
The court found Taylor provided crucial aid to rebels in Sierra Leone during its 11-year civil war that left an estimated 50,000 people dead.
Thousands more were left mutilated in a conflict that became known for the extreme cruelty of rival rebel groups who gained international notoriety for hacking off the limbs of their victims and carving their groups' initials into opponents.
The rebels developed gruesome terms for the mutilations that became their chilling trademark: they would offer victims the choice of "long sleeves" or "short sleeves" - having their hands hacked off or their arms sliced off above the elbow.
Taylor was convicted not only of aiding and abetting Sierra Leone rebels from neighbouring Liberia but also for actually planning some of the attacks carried out by Sierra Leone rebel groups. In return he was given "blood diamonds" mined by slave labourers in Sierra Leone and gained political influence in the volatile West African region.
Importantly, yesterday's ruling goes against an appeals decision by the International Tribunal for the Former Yugoslavia (ICTY), in which former Serbian general Momcilo Perisic was acquitted of aiding and abetting war crimes. Judges at the ICTY said that, in order to aid and abet a crime, a suspect has to have "specifically directed" aid towards committing crimes.
However, judges in the Taylor case disagreed with that: they said the key to culpability for aiding and abetting a crime is that a suspect's participation encourages the commission of crimes and has a substantial effect on the crimes actually being committed, not the particular manner in which a suspect is involved.
Memunatu Kamara, who had her left hand chopped off by rebels in 1999, travelled to the court in the Netherlands to hear the appeals verdict. She said she felt ill when she first looked at him but "when I saw him convicted, I was feeling good".
Prosecutor Brenda Hollis said: "The judgment brings some measure of justice for those victims who suffered so horribly."