Jefferson Circuit Judge Annie O'Connell read the grand jury's decision in open court. Media reports said the officer indicted was Detective Brett Hankison.
Police shot Taylor, 26, in front of her boyfriend after they forced their way into her apartment with a so-called "no knock" warrant.
Taylor's death, alongside that of George Floyd, a Black man who died in May after a white Minneapolis police officer knelt on his neck, helped spark a nationwide wave of protests demanding racial justice and an end to the use of excessive force by law enforcement.
Kentucky Attorney General Daniel Cameron was due to hold a news conference to announce the grand jury's decision regarding Hankison, Sergeant Jonathan Mattingly and Detective Myles Cosgrove.
Crowds gathered in anticipation of the decision around the city's Jefferson Square Park, the site of regular demonstrations against police brutality that have spread across the nation.
Ahead of the announcement, Louisville Mayor Greg Fischer announced a 72-hour curfew for the city beginning at 9 p.m., with exceptions for those going to work or to seek medical treatment. "I urge everybody to choose peaceful and lawful protest," Fischer, a white Democrat, said shortly before the announcement. "This is obviously a really important time for our city. I want us to think about our kids and our grandkids and get this right."
In May, Louisville banned police from using no-knock warrants, which allowed them to forcibly enter a premises without warning.
In June, the Louisville Metro Police Department fired Hankison. Interim Police Chief Robert Schroeder, who is retiring on Oct. 1, wrote in the termination notice that Hankison "displayed an extreme indifference to the value of human life" when he "wantonly and blindly fired" 10 rounds into Taylor's home.
The department reassigned the two other officers who fired weapons in Taylor's apartment to administrative duties.
Louisville police obtained the warrant to enter Taylor's apartment from a judge as part of an investigation into a drug ring at another house elsewhere in Louisville. They told the judge that they believed that one of the men suspected of selling drugs had used Taylor's apartment to receive packages.
Taylor had previously dated a suspected drug seller but had severed ties with him, according to her family.
She and her boyfriend, Kenneth Walker, were in bed when police broke down her door with a battering ram shortly after midnight.
Fearing intruders, Walker fired a gun, injuring Sergeant Jonathan Mattingly in the thigh, according to the police account. Mattingly, Hankison and Myles Cosgrove, a detective, began firing their guns. Five bullets pierced Taylor.
Walker has been charged with attempted murder. His lawyer has said there is evidence the bullet in Mattingly's thigh was shot by one of his colleagues, not by Walker.
Images of Taylor have become a familiar sight at the daily protests against police violence in cities across the United States. Last month, the influential actress and television mogul Oprah Winfrey featured an image of Taylor on the cover of O, the Oprah Magazine, calling for prosecution of the police who killed her.
Louisville has agreed to pay $12 million to Taylor's family to settle a wrongful-death lawsuit, Mayor Fischer announced earlier this month.
(Editing By Cynthia Osterman)
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