Terry, who won 17 trophies over a glittering 19-year career at Stamford Bridge has been out of work after leaving Aston Villa on the eve of the new season in order to pursue a managerial career.
That has yet to come to fruition, so the 41-year-old has agreed to return to his boyhood club in a part-time position where he will combine an on-field coaching role with mentoring of the club’s academy players.
Terry will continue with other commitments alongside the role.
Chelsea’s head of youth development Neil Bath said: “We are delighted to be welcoming John back to Cobham in a role that will involve coaching and mentoring the next generation of young players in our Academy.
“It goes without saying that John’s experience in the game, both as a world-class player and more recently as an assistant coach in the Premier League will be invaluable for everyone in the building.
“He will be a great mentor for our players and a fantastic asset to our coaching staff. We can’t wait for him to get started.”
Terry, who joined the club as a 14-year-old, made 717 appearances, 500 of them as captain, and won five Premier League titles and a Champions League.
He left in 2017 to join Aston Villa where he went on to become Dean Smith’s assistant before leaving in July in the hope of landing a managerial position.