Payten confirmed that the Queensland representative will become the next NRL star to make the cross-code switch to rugby union after signing a deal to join a club in France.
It comes after the off-contract Taulagi had been linked with a move to the Sydney Roosters.
But just as the coach announced the 27-year-old's move, he also ruled the star winger out for six weeks after he suffered a concussion in training last week.
The Cowboys have two remaining regular season games followed by potentially four more if they make finals and reach the grand final.
"He was carrying the ball in a contact drill, a pretty standard drill for us, and he just copped a collision right on the end of the cheek. The vision's not real good," Payten said on Friday.
"It's just a tough way for him to finish with the club ... He's been here for quite a while, became a regular first grader and Origin player in that time, and was a real bubbly, infectious, important part of our team."
As Taulagi had already picked up concussions earlier in the season, Payten said that the 27-year-old knew that one more would mean an extended time out as the NRL abides by strict stand-down rules.
But just as North Queensland lost their winger, the side have been boosted by the return of superstar halfback Tom Dearden (leg) and second-rower Jeremiah Nanai (hamstring) for their crunch clash against Wests Tigers on Saturday.
Having played just one game since round 10, Dearden's return is significant considering the Cowboys sit in eighth spot and know even a loss in their last two matches could see them slip out of the top eight.
"He plays direct, and he's a real strong voice and presence out in the field, and I like what he's done in the last couple of days," Payten said of Dearden.
"He's been more prominent in sitting with the coaches in the last eight weeks than he ever has ... It's been good for him to see it from a different lens."
The Tigers are aiming to recreate some 2005 grand final magic at Queensland Bank Country Stadium to spoil Dearden's return and North Queensland's finals hopes.
Fresh from producing one of the upsets of the season against the Roosters last Sunday, Wests will also receive a boost with prop Terrell May returning to the starting lineup and winger Sunia Turuva (knee) coming onto the bench while Alex Twal is out with concussion.
