Various souces had reported interest from the likes of Middlesbrough, Manchester City and Bolton in 22-year-old Watson.
However Taylor says he has no intention of cashing in. "There's no chance of Ben moving," he told the South London Press.
"He finished off last season brilliantly and we've sold enough as far as I'm concerned."
Taylor also dismissed speculation about Palace making a move for Blackburn keeper Jason Brown.
"We like him but that's probably an agent drumming up some interest," he said.
"I'm not looking to bring another keeper in, and that's for financial reasons as well. That was one of the reasons Gabor Kiraly had to go. If I'd had the funds, I would have kept him.
"Julian Speroni and Scott Flinders are fighting it out to start the season."