Tony Pulis admitted in March that he tried to sign Terry, 36, in the last window and would push for a deal this summer.
Swansea will try to tempt Terry to Wales, if they can stay in the Premier League, with Terry and manager Paul Clement close from their days at Stamford Bridge together.
John Terry is third in the all-time appearance list for ChelseaAP:Associated Press
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Former team-mates Frank Lampard and Didier Drogba have also paid tribute to the centre-back, who has suffered from Chelsea's switch to a back three.
John Terry lifts the Premier League trophy once again Chelsea are 2015 championsGetty ImagesJohn Terry has skippered the club to four Premier League title triumphsGetty Images
Terry won 14 major honours at the club since making his first-team debut in 1998.
The old-school defender lifted four Premier League titles, five FA Cups, three League Cups, the Champions League in 2012 and the Europa League.
Part of the letter read: “This has been the toughest decision of my life for me and my family, but I always envisaged leaving on the right terms, in the right way and at the right time - and that is now.
“I feel I still have regular football in me but understand that opportunities here at Chelsea will be limited, it is therefore time for a new challenge."
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