He has won three Premier League titles, the 2012 Champions League, 2013 Europa League, five FA Cups (2000, 2007, 2009, 2010, 2012), two League Cups (2005, 2007) and the Community Shield (2005, 2009).
Terry said on chelseafc.com: "I'm delighted to have signed an extension to my contract with Chelsea taking me into my 20th year with the club.
"I'd like to thank the fans and club for their continued support, and the manager who was instrumental for me the last season."
Offers were forthcoming from elite clubs abroad, but Terry's preference was always to stay at Stamford Bridge.
His current deal was due to expire on June 30, and while his future has been determined, it is still uncertain if two other Chelsea stalwarts will remain at the club next season.
Chelsea's record goalscorer Frank Lampard, who is 36 in June, and Ashley Cole, who may be tempted to play elsewhere after being a peripheral figure this term, are both imminently out of contract.
Mourinho, who presented his end-of-season report to the Chelsea hierarchy on Monday, insisted he wanted all three to stay.
He now has his wish regarding Terry.
Chelsea chief executive Ron Gourlay said: "We are very pleased John, who is an undoubted Chelsea legend, will continue to lead the team next season, as he has done for so many years with unrivalled achievement.
"Both Chelsea FC and John have been clear throughout that we wanted his outstanding career at the club to continue, and it is important the matter has been concluded so soon after the end of the season, allowing us to look forward to and plan for 2014/15."
After watching from afar before returning to Stamford Bridge last June, Mourinho wondered if Terry's time was up.