Terry announced earlier this week that he will move on at the end of the season after more than two decades at the club.
"It came as a surprise," said Fabregas told talkSPORT ahead of Saturday's FA Cup semi-final clash with Tottenham.
"There was a lot of talk and speculation that it could be his last year but we didn't know for sure. It is a very personal decision between him and the club.
"It is a shame because I cannot see anyone replacing the role he does in the team. He is irreplaceable for now."