"I'm delighted to have signed an extension to my contract," the 34-year-old central defender told the club website (www.chelseafc.com) on Thursday.
"After adding another major trophy to my collection this month I hope myself, the players and manager can continue to bring success to our club.
"Playing for this great club makes me so proud. And as always I would like to thank the fans who have continually supported me."
Terry joined Chelsea as a schoolboy in 1995 and has made 661 appearances, the third highest for the Londoners behind Ron Harris (795) and Peter Bonetti (729).
Not only has the former England captain been an imposing presence at the back, he has also been a constant threat at set pieces in opposition penalty areas.
One-club-man Terry has a remarkable goal record for a defender, having netted 63 times for Chelsea.
Manager Jose Mourinho said there was no sentiment in the decision to award him a fresh deal.
"This new contract is not to say 'thank you very much', it is because John continues to perform," Mourinho said.
"He is a top defender. I am happy that he completely deserves this new contract after a season where he has already played 40 matches."
Terry led Chelsea to a 2-0 victory over Tottenham Hotspur in the League Cup final at Wembley earlier this month and is hoping to land a double, with his team six points clear at the top of the Premier League and having a game in hand.
(Writing by Ed Osmond and Toby Davis, editing by Tony Jimenez)
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