Terry’s future had been subject to much speculation, with Chelsea announcing last Friday that they had offered their long-serving captain fresh terms to continue his 18-year playing career at Stamford Bridge.
The former England skipper subsequently revealed that he would take time to consider the “different role” on offer from his boyhood club before making a decision, before then offering an emotional on-pitch statement after Chelsea’s final game of the season on Sunday.
Chelsea confirmed on Wednesday that the 35-year-old has opted to stay put following discussions with incoming manager Antonio Conte, who will take over after leading Italy at Euro 2016.
Terry told the club’s official website: “I am delighted to sign a new contract with the club. Everyone knows I’m Chelsea through and through.
“I am looking forward to next season under the new manager and, hopefully, we can make it a successful one.”