The 31-year old defender allegedly called QPR's Anton Ferdinand a b**** c*** during a match between the clubs in October but a four-day trial has cleared the former England captain of any wrongdoing.
Terry's defence throughout the trial, and straight after the incident, was that he was merely repeating what he thought Ferdinand believed he called him at Loftus Road with Chief Magistrate Howard Riddle suggesting the footage and facts were inconclusive to place any punishment on Terry.
Mr Riddle said the case was not about "whether Mr Terry is a racist in the broadest sense of the word."
"It is impossible to be sure what were the words spoken by Mr Terry at the time," he added.
"It is also impossible to say what was said by Mr Ferdinand.
"I am satisfied that there was little or no good reason for him to lie about the central issue on this case. I think it is unlikely that on the central point he was lying.
"Overall I found Anton Ferdinand to be a believable witness on the central issue. It's clear that the prosecution had built a strong case."