The Blues legend, 37, has agreed an £800,000-a-year deal at Stamford Bridge and will take over once he completes his coaching badges.
The ex-England captain, who has been training for his Uefa licences since 2014, has previously said he would love to manage Chelsea.
He will replace another former Stamford Bridge favourite, Jody Morris, who quit the Academy side to join Frank Lampard at Derby.
Boss Maurizio Sarri is understood to have been behind the approach.
A source said: "John has made no bones about the fact he’s keen to get into management and obviously Chelsea has always been the dream.
"He has been in talks with the boss for the past few weeks and has verbally agreed the deal.
"It will only come to fruition though once he has finished his badges.
"An as-yet undecided manager will take over in the interim."
Terry was known as ‘Captain, Leader, Legend’ during a 22-year playing career at the Bridge.
The centre-back made 713 appearances for the club, winning 15 major honours — including five Premier League titles.
He played for Aston Villa last season, leaving the Midlands outfit after they lost the Championship play-off final to Fulham.
Earlier this month it emerged Terry had turned down a move to Spartak Moscow, worth £3million in wages.
Two weeks ago Sarri admitted that Terry would be welcome to join his coaching staff should he not continue playing for another year.
Similarly, Terry recently spoke of his ambition to manage his former club. He said: “I want to be the manager of Chelsea one day but that is a five to eight-year plan.”
Source: Read Full Article