The announcement came after a grand finale Wednesday night that included two hours of performances by this year's finalists, past contestants and several surprise celebrity guests.
The results show took place at the Kodak Theater in Los Angeles. Fans of local favorite Katharine were gathered in nearby Universal City and Taylor's fans were rooting for him in his hometown of Birmingham, Alabama. Both groups were shown on the Kodak's big screen live via satellite.
The finale opened with last year's winner, Carrie Underwood, and this year's 12 finalists all dressed in white singing Barry Manilow's "I Made It Through The Rain."
The evening included duets with the show's 12 finalists paired with surprise celebrity guests.
But, the biggest surprise of all was a performance by Prince who sang a medley of songs towards the end of the show.
Earlier, teen finalist Paris Bennett was brilliantly paired with jazz great Al Jarreau, to sing his "We're In This Love Together." Rocker Chris Daughtry joined Live to sing "Mystery" and Katharine teamed up with Meat Loaf to sing "It's All Coming Back To Me Now."
In between the songs, there were various attempts at comedy, some more successful than others.
Country girl Kellie Pickler, who was teased during the contest for her malaprops and not knowing what calamari was, did a few segments with celebrity Chef Wolfgang Puck.
Kellie got her first reluctant taste of escargot and Puck managed to send her screaming from the table when he introduced her to a few live lobsters.
2Other silliness included the Golden Idol Awards which "honored" the very worst performances the judges had to endure during the show's auditions.
One of the awards was for "best" celebrity impersonation. The winner: nerdy contestant Michael Sandeki, for his impersonation of Season 2 runner-up Clay Aiken.
Michael was asked to sing his audition song, Elton John's "Don't Let The Sun Go Down On Me," and looked genuinely surprised when the real Clay joined him on stage.
Divided up by gender, the six female finalists and six male finalists each had a chance to sing a medley of songs.
The six male finalists, Chris, Taylor, Ace Young, Bucky Covington, Elliott Yamin, and Kevin Covais sang Bachman Turner Overdrive's "Taking Care of Business," Fleetwood Mac's "Don't Stop," and John D. Loudermilk's blues/rock classic "Tobacco Road."
The women - Katharine, Paris, Kellie, Mandisa, Melissa McGhee, and Lisa Tucker - sang Shania Twain's "I Feel Like A Woman," Elvis Presley's "Trouble," Carole King's "Natural Woman," and Chaka Khan's "I'm Every Woman."
More duets included Elliot with Mary J. Blige singing U2's "One" and Taylor, joined by Toni Braxton, for Elvis Presley's "In The Ghetto."