Terry, who spent the bulk of his career with Chelsea, captained second-tier Aston Villa last season.
Now the Birmingham club reportedly want him to join their coaching staff as part of a new-look set-up, with Thierry Henry in the running to take over as manager at Villa Park after Steve Bruce was sacked earlier this week.
“After 23 incredible years as a footballer, I have decided now is the right time to retire from playing,” Terry said in a message posted on his Instagram account.
Terry, capped 78 times by England, recently rejected a chance to play for Spartak Moscow, saying a move to Russia was not right for his family.
His last game as a professional was Villa’s 1-0 Championship play-off final defeat by Fulham in May — a loss that denied Villa a return to the Premier League.
But his club career will be best remembered for his time at Chelsea where he won five Premier League titles, five FA Cups, as well as the Champions League and Europa League, although he did not play in the two European finals.
– ‘Best decision’ –
“As a 14-year-old, I made my best and biggest decision: to sign for Chelsea Football Club,” added Terry, who also thanked his family for their support.
“Words will never be enough to show how much everyone at the club means to me, in particular the fans…I hope I have done you all proud wearing the shirt and the armband.”
He also referenced his time at Villa by saying: “It was a privilege to represent such a renowned football club with great fans.
“I look forward to the next chapter in my life and the challenges ahead.”
Terry made 717 appearances for Chelsea, scoring 67 goals, and was widely regarded as one of the best English centre-halves of his generation.
But in 2011 he was accused of racially abusing Anton Ferdinand, the brother of Terry’s England central defensive partner Rio Ferdinand, during a west London derby against Queens Park Rangers.
Terry was absolved of criminal charges during a 2012 court case.
But the Football Association, who had stripped Terry of the England captaincy while they waited for the case to be resolved, subsequently imposed a four-game ban and fine on the defender.
The decision by the FA, English football’s governing body, to pursue disciplinary action after the court case led to Terry’s retirement from international football.
Meanwhile Terry was widely ridiculed when, after Chelsea beat Bayern Munich to win the 2012 Champions League final, he appeared in full playing kit for the post-match celebrations despite not taking part in the game because of suspension.
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