The Gunners started Saturday's action with a five-point lead at the Premier League summit, but were beaten 6-3 by Manchester City in an early kick-off at the Etihad Stadium.
Chelsea capitalised on the chance to go within striking distance as they defeated Palace 2-1 at Stamford Bridge, meaning they could climb into first place with a win at Emirates Stadium on Monday 23rd.
Asked if the Arsenal result had been an extra motivation ahead of the clash with Palace, Terry said: "Yeah, it was a little bit. We caught the result and it was pleasing for us to pick up three points.
"We now go away to Arsenal with a chance to go top of the table, so that is enough for us as a team collectively to have enough motivation over Christmas."
Chelsea were unconvincing in their victory over Palace, with Ramires netting the winner after Fernando Torres' opener had been cancelled out by Maouane Chamakh.
Terry acknowledges that there is room for improvement both in attack and defence, but has been happy with the battling qualities they have displayed.
He said: "At the minute we are grinding out results. Ideally we would like it to be a bit more comfortable, especially at home, but teams are coming here and showing a lot of belief at the moment. I think we are seeing that throughout the whole Premier League.
"I have spoken before about killing games off, and we haven't done that, which puts a lot of pressure on the defence, but at the same time we could have maybe been a bit more solid over the last few games, conceding a couple of sloppy goals from corners.
"That is something we are working on and trying to keep it tight at the back, and hopefully one goal's enough sometimes.
"But there are games when it's not and it's important that not only the strikers but the midfielders as well chip in with their fair share."