Anthony Ogogo upset Ukraine's world number one Ievgen Khytrov to make the middleweight quarter-finals.
The 23-year-old from Suffolk won on the judges' verdict after the three-round bout finished 18-18 on points, with an appeal from Ukraine later rejected.
Ogogo dropped to his knees as his victory over Khytrov, top seed and reigning World champion, was announced at London's ExCel Arena.
How the bout was decided
- Bout finished 18-18 on points
- On countback - in which individual scores of all five judges are tallied together - it was a 52-52 tie
- Officials required to pick a winner by pressing red or blue button
- Majority went with Ogogo
He fights Germany's Stefan Hartel in the last eight on Monday.
was defeated in his lightweight round of 16 bout against Italy's Domenico Valentino.
The third seed, fighting at his third Olympics, used all his experience to outwit Taylor, 21, winning with a final score of 15-10.
Fancied Irish middleweight
lost his last 16 bout against Hartel 19-12, meaning he is the first of his squad to lose a bout in London.
Ogogo said: "This is my time. It was such a tough fight. The bad luck I've had with the draw and the disruptions before, I was due a bit of luck. I have been on the other end so many times, I deserve that.
"I am so proud to wear this lion on my chest. It feels amazing. To come through and hopefully inspire people.
"People don't realise I'm a pretty determined fighter. I surprise people by how well I can fight. No-one believed I'd win this fight other than me and my family. I don't even think the rest of the team thought I could do it."
Defeat for Taylor in lightweight division
Ogogo matched his illustrious opponent in a brutal fight but faced an agonising wait as the final score had the pair level.
Even the countback system - in which the individual scores of all five judges are tallied together - yielded a 52-52 tie.
The officials were required to pick a winner by pressing either a red or blue button - and the majority went with Ogogo.
Khytrov was gracious in defeat, saying: "I'm not disappointed. Life will go on. I'm not angry. It was a good fight. Good luck to Ogogo."
The exact grounds for Ukraine's appeal were not immediately clear.
Their case was heard by the International Amateur Boxing Association's competition jury after the afternoon session and swiftly rejected.
To add to the confusion, the official result sheet showed the scores of three judges which when added up, scored the fight 53-52 in Khytrov's favour.
However a spokesman for AIBA said there was no mistake in the final score, that the system only showed selected scores and that when a bout is tied, the calculations are made based on the complete individual scores.
Taylor became the first Briton to lose in the Olympic competition but can be proud of his performance against the former world champion.
Valentino led by only one point going into the final round but with the Scot feeling the need to chase the fight, the Italian managed to pick him off for a deserved victory.
Also in action on Thursday was arguably the finest amateur boxer in the world, Ukrainian lightweight
who beat Wellington Arias Romero of the Dominican Republic 15-3.
Showing a range of shots, dazzling footwork and water-tight defence, Lomachenko demonstrated exactly why he is the overwhelming favourite in the 60kg division, having won featherweight gold in Beijing aged only 20.