Taylor denies murdering the 14-month-old at a Christchurch house on July 3 in 2015.
The de-facto stepfather claims that his former partner and Ihaka's mother, Mikala Stokes, inflicted the boy's fatal injuries while he wasn't home.
The 23-year-old was giving evidence today at the High Court in Christchurch.
The night before the alleged murder, Taylor said he heard two separate bangs from Ihaka's room.
On the second bang, he got up to check on the boy and found him with some bleeding around his mouth. He also "looked a little bit dazed and confused''.
He got him up, put teething gel on his mouth and they sat in the lounge by the fire in the dark to make sure he was all right, Taylor told the jury.
After about 10 minutes, Taylor said he sat up too quick, got dizzy and "then I dropped him''.
Taylor cried as he said: "As I was standing up, I stumbled and it's really all I remember and then Ihaka was on the ground.''
He picked up the child and cradled him, the court heard, and the boy didn't cry or make any noises.
Taylor said he stayed up with him for "a few hours'', as he "just wanted to keep an eye on him''.
In the early hours of the morning, satisfied that Ihaka was "happy and okay'', he put him back to bed.
The next morning, he told Ms Stokes the baby had suffered a fall in the night and bitten the inside of his lip.
Taylor said the child had the "worst bruise I've ever seen Ihaka with'' on the right side of his chin. His cheek was also swollen, he said.
The couple took Ihaka to the doctor in the morning for a check-up.
But Taylor admitted he didn't tell the doctor or Ms Stokes that he'd dropped the boy.
"I thought she might've gotten angry and I was quite upset with myself as well because I felt it was my fault.''
His evidence continues.
Earlier, defence counsel Simon Shamy addressed the jury to say that the nub of the defence case is that Ms Stokes caused the 59 injuries that killed Ihaka, not Taylor.
"The Crown case unravels because there is no proof that it was Troy Taylor rather than Mikala Stokes who delivered these injuries,'' Shamy said.
Taylor was earlier asked about his relationship to Ihaka. He replied: "I don't care what anyone thinks - he is my son. I loved them and considered them to be my children.''
Taylor also told how he had planned to adopt Ihaka and Ms Stokes' second child as his own, and that he'd also given Ms Stokes a "commitment ring'' to show that one day he would marry her.
Asked about his relationship with Ms Stokes, he became emotional: "She was my best friend. I loved her.''
The Crown concluded its case this morning.
The Crown and the defence agree there were no intruders on the night Ihaka was hurt and that the boy's 59 horrific injuries, including broken bones, were not accidental.
The Crown says that Taylor was suffering from sleep deprivation, headaches, and irritability caused by multiple concussions around the time Ihaka was developing an ear infection, when he allegedly caused the fatal injuries.
Ms Stokes, who was 36 weeks pregnant at the time of Ihaka's death with her second child, repeatedly denied the accusations when she gave evidence last week.
Taylor also denies assaulting the child on July 2, 2015 - the day before the alleged murder.
The trial, before Justice Mander, continues.