The 56-year-old legend, who has won 16 World Championship titles during a glittering career as the sport's most successful player, has begun to scale down his commitments on the circuit in the past year.
After slowing down his appearances away from the TV cameras, Taylor is not planning to compete on the PDC ProTour in 2017 and had suggested that he would review his retirement plans at the end of the campaign.
However, speaking to ITV Sport ahead of his Unibet Masters tie with Michael Smith on Friday night, Taylor conceded that he is now planning to end his celebrated career after having one more World Championship challenge.
"At the end of the year, that's me done," said Taylor. "The World Championship will be my last one.
"I can enjoy it more, I think I'm more excited now and I've got butterflies, whereas I didn't have that before. Perhaps that will do me good.
"I'm looking forward to the next ten months. It's harder for me to get motivated and keep the practising up like I've done for 30 years. It's hard to be dedicated week-in and week-out and that's what's taken its toll on me.
"The body can't take four or five hours in the practice room, and that's what you've got to do to compete against these youngsters."
Taylor will begin his challenge to win a seventh Betway Premier League title when the new season begins in Newcastle next Thursday, and will still qualify for the BetVictor World Matchplay, Unibet World Grand Prix and the William Hill World Darts Championship by virtue of his world ranking.
He is also set to compete on the World Series of Darts circuit and in September's Unibet Champions League of Darts, while he would still need to reach a TV final this year to qualify for November's Grand Slam of Darts.
Speaking to the PDC following his 10-6 win over Smith, Taylor added: "I'm just going to enjoy it. If I get beaten, I get beaten.
"I'm okay about it, I'll always be involved in darts anyway. I've had 30 years of being top of the tree. You've got Michael van Gerwen who's going to take over, and embrace him and let him be the new ambassador."
Phil Taylor Video Interview