"The Blues legend will work with our young players and coaching staff in our youth development programme, sharing the vast experience gained from his 20-year playing career and recent spell as assistant coach at Aston Villa," the club said in a statement on its website.
Despite being involved in unsavoury incidents on and off the pitch during his playing days Chelsea's head of youth development Neil Bath said Terry would be a 'great mentor' for the youngsters.
"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," said Bath.
"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."