The 45-year-old, the side’s first-ever coach, led them to a historic 24-20 win over England Community Lions at St Helens last year.
That was one of two games Taylor was in charge for in 2019, but this year there have been no games due to COVID-19.
And with the 2021 Emerging Nations World Cup being called off due to the continuing uncertainty over the virus, he has decided the time is right to stand down from the position.
“It’s with a heavy heart that I am stepping down as head coach,” said Taylor.
“I was hoping to bow out after the Emerging Nations World Cup, but as that isn’t happening now, this I feel is the right time to step down due to a change in commitments for me in 2021.
“With this timed for today, Wales RL can move on positively with a new coach to lead them to 2025 Rugby League World Cup.
“I was immensely proud to lead the first ever Wales Women’s international rugby league team and I’d like to thank everyone involved so much for their effort.
“I was proud to coach a special group who have formed a strong bond. I will never forget the weekend in 2019 when we made history by beating the English. Good luck to the side and all at Wales RL for the future.”
Wales Rugby League CEO Gareth Kear said: “I have huge respect for the positive culture that Craig has created within our Women’s National team.
“His will tenure will go down in history for leading us to our first ever victory.”
Wales are due to play their first full Test match in 2021 against England, who are currently ranked third in the world.
Full details on how to apply for the position can be found on https://wrl.wales