The move is a major blow to manager Roy Hodgson, as well as being somewhat embarrassing as he had continued to stand by Terry throughout the racism storm that erupted over a clash with Anton Ferdinand at Loftus Road last October.
Hodgson selected Terry for Euro 2012 prior to a court case, at which the 31-year-old was found not guilty.
He then chose Terry for this month's World Cup qualifiers against Moldova and Ukraine even though the FA had continued their own action against him.
Yet, whilst Hodgson clearly felt the Chelsea man still had a role to play, Terry no longer feels it is possible.
"I am today announcing my retirement from international football," said a statement issued by Terry. "I would like to thank the England managers who have selected me for my 78 caps.
"I have had great pleasure in sharing that honour with all the players that I've played with.
"I would like to thank them, the fans and my family for their support and encouragement during my international career.
"Representing and captaining my country is what I dreamed of as a boy and it has been a truly great honour. I have always given my all and it breaks my heart to make this decision. I want to wish Roy and the team every success for the future.
"I am making this statement today in advance of the hearing of the FA disciplinary charge because I feel The FA, in pursuing charges against me where I have already been cleared in a court of law, have made my position with the national team untenable.
"I now look forward to playing for Chelsea FC, and challenging for domestic and European honours, and I want to thank the fans and the club for their continued support."
Whilst plenty will lament Terry's decision to abandon the national cause, others are bound to feel it is the correct move.
Having made his debut for England in 2003, within three years Terry had been confirmed as Three Lions skipper by Steve McClaren.
He then emerged as Fabio Capello's choice as well, although it was under the Italian that Terry became embroiled in so much controversy.
An alleged affair with French model Vanessa Perroncel - a former partner of team-mate Wayne Bridge - led to Capello stripping Terry of the captain's armband for the first time in February 2010, depriving him of the opportunity to lead his country at that summer's World Cup in South Africa.
Yet it did not stop Terry launching a one-man mutiny following the tepid draw with Algeria in Cape Town, when he challenged Capello's authority with a public demand for the austere regime to be relaxed.
Capello quickly slapped Terry down and reasserted his authority.
The Italian remained a huge Terry fan though and after an embarrassing charade in Denmark in February 2011, when the captain's armband was tossed around the team despite him being on the pitch, Capello decided to reinstate the centre-half.
Typically though, further controversy was not far away.
The nature of Terry's clash with Ferdinand led many to question whether this was the right behaviour for an England captain.
Many felt not, including FA chairman David Bernstein, who stripped Terry of the armband without telling Capello.
The Italian, furious, resigned and it was notable he had a lengthy conversation with Terry in Munich, immediately before this year's Champions League final, for which the Chelsea man was suspended.
Now Hodgson is left to pick up the pieces and fashion a World Cup qualifying campaign without a major component of his defence.
Meanwhile Terry, facing a much lower burden of proof, must attempt to clear his name one final time.
His delegation will be led by George Carter-Stephenson QC - who successfully defended Terry in court - and are said to be ready to argue that his acquittal in a criminal trial means the FA case cannot proceed.
That would involved citing FA rule 6.8, which governs disciplinary hearings and states that the results of relevant civil or criminal proceedings are "presumed to be correct and the facts presumed to be true" by FA commissions.
The FA will doubtless insist their charge against Terry is distinct from the racially-aggravated public order offence from which he was cleared in July.
Terry admitted in court saying "f****** black c***" but claimed it was used as part of a denial after he believed Ferdinand had accused him of using those words.
The panel who handed Liverpool striker Luiz Suarez an eight-match ban when they found him guilty of racially abusing Manchester United defender Patrice Evra last season declared simply using racist language was enough to constitute a breach of FA rules.
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