Taylor, a 6-4 shooting guard, was arrested early Saturday morning. He started nine games last season and averaged 4.3 points.
"I'm extremely disappointed in Diamond,” Southern Illinois coach Barry Hinson said in a statement. “We're in the business of educating student-athletes and teaching them how to conduct themselves on and off court, and this is a significant setback.
“The question now is how do we react? I met with Diamond this morning and issued a challenge to him to become a first-class student and resident of Carbondale. How he responds will determine his status going forward.”
Saturday’s DUI arrest was the latest of Taylor’s off-the-court troubles.
Hinson also announced in early August that Taylor would face internal disciplinary measures due to pending charges for theft of a bicycle.
In September of 2011, Taylor was suspended from the team due to a violation of team rules. He was arrested for possession of marijuana in April of 2011, according to Jackson County court records.
Taylor was also kicked off Wisconsin's basketball team after being arrested for burglary in September of 2009. He later transferred to Southern Illinois.
Taylor was among the Chicago’s top area players coming out of high school and played at St. Joseph in Westchester, Ill.