The Reds got their long-awaited first home win of the season tonight thanks to Taylor's stoppage time penalty, with the frontman being fouled in the area in added time before calmly slotting home with the final kick of the game.
Forest took a deserved lead into the half-time break courtesy of Scott McKenna but the Sky Blues looked unrecognisable in the second half from their timid first-half performance as they dominated large parts of the match and scored their deserved equaliser thanks to Callum O'Hare just before the hour mark.
Chris Hughton made four changes to the starting XI from the side that lost to Middlesbrough on Saturday, with Gaetan Bong, Ryan Yates, Sammy Ameobi and Miguel Guerrero making way for Samba Sow, Joe Lolley, Lyle Taylor and Yuri Ribeiro.
Tonight's visitors in sky blue, Coventry City arrived on the back of a victory against league leaders Reading on Friday night and named ex-Reds' forward Tyler Walker amongst their substitutes.
The first 10 minutes of the match drifted by quietly before springing into life courtesy of Anthony Knockaert, who took aim from the edge of the area and his low fizzing effort bounced just in front of Marko Marosi who managed to awkardly spill the ball out of play using his forearms. The resulting corner found the head of towering defender Scott McKenna, however he could only manage to nod wide of the post from close range as the match remained goalless.
The deadlock was broken on the half-hour mark, Knockaert's inswinging free kick landed at the feet of Luke Freeman who saw his effort blocked, the ball pinballed around the mass of bodies in the area, until it fell invitingly for McKenna who smashed the ball home from six yards out and wheeled away in delight as The Reds took the lead.
Forest looked much improved from the weekend and moved the ball about comfortably and with ease. The visitors struggled to worry Brice Samba throughout the first half, who made just one simple save from Callum O'Hare's tame effort, as The Reds took a deserved half time lead to the dressing room.
The Sky Blues came firing out of the blocks in the second half and almost levelled the tie when Maxime Biamou rattled Samba's post. Biamou had been slid through by Gustavo Hamer and his drilled effort cannoned back off the woodwork before being scrambled away from danger and out for a corner. The corner was rifled back into the box and was met by the high-rising Leo Ostigard, but the Brighton loanee sent his header well wide of the goal.
The leveller arrived just shy of the hour mark when Sam McCallum whipped a delightful cross into the area, and there wasn't a red shirt in sight as O'Hare found himself in acres of space to header the ball home.
The visitors looked purposeful in the attacking third throughout the second half and looked the most likely to take home all three points as they put together a succession of decent opportunities culminating with O'Hare skipping past The Reds defence and firing an effort at goal but Samba was on hand to beat the ball away.
As the clock ticked, The Reds threatened as Lolley's outswinging corner was flicked on by the head of Guerrero and the ensuing goalmouth scramble resulted in substitute Ryan Yates skewing his close-range effort wide of the post.
The game burst into life in the closing stages and just seconds later Samba was called upon once again and he produced a terrific save to deny Ostigard who had arrived late at the back post with a diving header.
In the closing seconds of the match, Lolley caught out the visitors high line with a perfectly weighted through ball to Lyle Taylor who rushed into the penalty area, only to be bought down by Kyle McFadzean and referee Geoff Eltringham had no choice but to point to the spot.
It proved to be the decisive twist in the match as Taylor brushed himself down and converted the penalty with his trademark walk up to the ball as he sent Marosi the wrong way and fired his effort into the bottom corner of the net.
There was no time to restart as the Forest players celebrated in front of the empty Trent End, with the referee calling time on proceedings and The Reds rerturning to winning ways.
Forest: Samba; Christie, Figueiredo, McKenna, Ribeiro; Colback (c), Sow (Yates 68'); Lolley, Freeman (Ameobi 68'), Knockaert (Guerrero 79'); Taylor
Unused subs: Smith, Mbe Soh, Jenkinson, Arter
Goals: McKenna 30', Taylor (pen) 90+6'
Booking: Sow 18'
Coventry: Marosi; Rose, McFadzean, Ostigard; O'Hare, Sheaf, Hamer, Giles (Dacosta 90+2'); McCallum, Biamou, Godden (c) (Walker 56')
Unused subs: Wilson, Kelly, Allen, Thompson, Bapaga
Goal: O'Hare 57'
Bookings: Ostigard 85', McFadzean 90'
Referee: Geoff Eltringham