The Taylor reactor is a dynamic mixer based on the principles of Taylor vortex flow. However, traditional Taylor reactors feature smooth inner and outer cylinder surfaces, presenting challenges in achieving uniform mixing and efficient mass transfer. These limitations do not meet the requirements of modern chemical processes for highly efficient mixing equipment. This article introduces a novel Taylor reactor equipped with vertical baffle plates, designed to overcome these challenges. A comprehensive methodology combining CFD-PBM and experimental techniques was employed to investigate both droplet size distribution and mixing performance in the annular gap. Compared to traditional designs, the new device demonstrates significantly lower COV at 0.018 and Sauter mean diameter at 38.3 μm. Optimal mixing efficiency is achieved at rotating Reynolds number (Re) of 1.17 × 105 and inlet Reynolds number (Rei) of 2.65 × 103. Numerical simulation results suggest that vertical baffles effectively enhance liquid-liquid interactions including collision, interface contact, and droplet residence time within the annular gap. Moreover, increased turbulent stress in the flow field contributes to greater vorticity, turbulence intensity, and turbulent kinetic energy resulting in smaller droplet sizes and improved mixing efficiency. These findings provide a theoretical foundation for hydraulic structural optimization design as well as widespread application of Taylor reactors.