Terry has been advised against travelling to Japan for the tournament as he continues his recovery from the ligament damage sustained against Liverpool last month.
The news is a blow for Chelsea as they have won just once in seven games in the absence of their skipper.
Chelsea interim boss Rafa Benitez confirmed the former England international would not make the trip to Japan with the rest of the squad.
"We've been talking with the doctor. The inflammation during the flight will not be the best thing for him so he will not travel," Benitez said.
"He wanted to go and to help, but it's better that he stays here. We don't know when he will play. We have to wait and see how he reacts."
Frank Lampard is expected to play some part in Saturday's Premier League clash with Sunderland and will fly to Japan after recovering from his calf problem.
Daniel Sturridge's hamstring injury will prevent him from participating at the Stadium of Light, but the Club World Cup is a realistic target.
"Sturridge has been training but it's too early for him so he will not go to Sunderland. We will fly to Japan from Sunderland and we'll see if he can do something in Japan," Benitez said.
"Frank Lampard has been training and will be in the squad for Sunderland and if everything is fine he will fly to Japan too.
"At least one important player is back because we need character, experience and numbers. Frank is a very experienced player so this is quite positive.
"At the moment we have a good team but we needed players with more experience. He can have an impact. He scores goals and understands the game.
"I'm disappointed for the other two, but at least with Frank we have one more body."
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