Taylor, who won the last of his seven caps in England's most recent Test against South Africa at Centurion three months ago, withdrew from Nottinghamshire's opening and ongoing County Championship match at home to Surrey because of illness.
The Midlands county announced on its website on Tuesday that "specialist scans revealed yesterday (Monday) that the 26-year-old has the very serious heart condition, ARVC (Arrhythmogenic Right Ventricular Arrhythmia)."
Taylor, whose condition requires surgery, told his Twitter followers: "Safe to say this has been the toughest week of my life! My world is upside down. But I'm here to stay and I'm battling on! #lifestooshort."
England and Wales Cricket Board director Andrew Strauss, Taylor's first England Test captain, said: "It is both shocking and saddening to hear that James' career has been cut short in such a sudden and unexpected manner.
"Throughout his career, he has constantly impressed with his determination to make the absolute most of his ability, and it is immensely cruel that such a hard-working player will be unable to fulfil his great potential in the international arena.
Nottinghamshire director of cricket Mick Newell said no
one at Trent Bridge had any idea about the severity of Taylor's condition.
"Myself and all of James' team-mates and colleagues are terribly sad to hear this news, which comes as a big shock to us all," Newell said.
"He is a model professional, the most hard-working I've ever known in cricket, making it all the more difficult to accept that his career has been cut short in this way.
Born in Nottingham, the diminutive Taylor -- the son of a jockey -- made his first-class debut for Leicestershire in 2008, with the middle-order batsman making his Test bow against South Africa at Headingley four years later.
But after those first two caps in 2012, he had to wait more than three years for another Test appearance.
Recent months had witnessed some of Taylor's best international performances.
Taylor also made 27 one-day international appearances, averaging 42.33, with his lone century scored against Australia at Old Trafford in September.
His first-class career saw Taylor score more than 9,000 runs, at average of over 46, including 20 hundreds.
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