Colchester have officially confirmed that discussions regarding the sale of the club to a consortium led by former Chelsea captain Terry, 45, have ended.
Terry and his consortium had been in talks over a potential takeover for months, with the Chelsea icon having been spotted at the JobServe Community Stadium as recently as April to watch a fixture against Accrington Stanley.
The club have now released a statement confirming that the deal is off, saying: "Colchester United Football Club can confirm that discussions regarding the potential acquisition of the Club have concluded, and the parties will not be proceeding with the transaction.
“Both parties invested considerable time and effort into exploring the opportunity and would like to thank everyone involved for their professionalism and cooperation throughout the process."
The decision to halt the sale was described by the club as a mutual one, the statement continued: "Following an extended period of due diligence and discussions, the parties have agreed not to proceed with the transaction.
“The decision has been reached amicably and with mutual respect. Colchester United remains focused on preparations for the forthcoming season and on continuing the positive progress that has been made both on and off the pitch."
Current owner Robbie Cowling, who has been in cahrge for nearly two decades, expressed his gratitude for the professional conduct during the talks.
Cowling added: "I would like to thank everyone involved for the time, effort and courtesy shown throughout the process.
“Whilst we have ultimately decided not to proceed together, I wish all concerned every success in the future. No further comment will be made at this time."