We investigate the effect of microbubbles on Taylor-Couette flow by means of direct numerical simulations. We employ an Eulerian-Lagrangian approach with a gas-fluid coupling based on the point-force approximation. Added mass, drag, lift, and gravity are taken into account in the modeling of the motion of the individual bubble. We find that very dilute suspensions of small non-deformable bubbles (volume void fraction below 1%, zero Weber number and bubble Reynolds number 10) induce a robust statistically steady drag reduction (up to 20%) in the wavy vortex flow regime (Re = 600 -2500). The Reynolds number dependence of the normalized torque (the so-called Torque Reduction Ratio (TRR) which corresponds to the drag reduction) is consistent with a recent series of experimental measurements performed by Murai et al. (J. Phys. Conf. Ser. 14, 143 (2005)). Our analysis suggests that the physical mechanism for the torque reduction in this regime is due to the local axial forcing, induced by rising bubbles, that is able to break the highly dissipative Taylor wavy vortices in the system. We finally show that the lift force acting on the bubble is crucial in this process. When neglecting it, the bubbles preferentially accumulate near the inner cylinder and the bulk flow is less efficiently modified.