Terry, 27, had been the skipper during the Steve McClaren era, after David Beckham quit after the 2006 FIFA World Cup Germany™. But his position had been in doubt when Capello took charge.
"I think everybody realises it means the world to me, to retain the armband," said Terry. "To get the armband back is a huge achievement for me.
"It was about an hour ago, just after training. The manager called the whole squad together and told us as a whole. For me to get it above the likes of him (Ferdinand) and the other players in the squad is a great honour."
Terry said he was a little surprised when Capello selected him ahead of Ferdinand, who was named vice-captain. "I'd never given up on the armband and never will do," he said.
"I'd heard the whispers Rio got the armband so I was a little bit shocked, but I've got to make the most of it. My target now is to qualify for the World Cup and that's the aim going forward."
Capello said Terry's "big personality" was the deciding factor. "Rio, when he was captain, played very well - the same level as John," the Italian explained.
"It was not easy for me to choose because they are very good players. The big personality of John was the reason I chose John, but Rio is very important to the team."
The Chelsea skipper, who has won 44 England caps, begins his second stint as captain in Wednesday's friendly against Czech Republic at Wembley. England's South Africa 2010 qualification campaign begins in September, with ties against Andorra in Barcelona and Croatia in Zagreb.
Terry was Capello's skipper against the United States just days after the Chelsea centre-back missed the penalty that cost his side the UEFA Champions League. The defender shrugged off his Moscow misery by scoring and leading England to victory in that friendly, a display of character which he believes played a part in convincing Capello of his qualities.
"I think that showed the manager what kind of character I am. To bounce back the way I did after that huge disappointment showed my character. Maybe that persuaded him," Terry said.
"He gave me a huge boost by giving me the armband in that match. I went on the pitch, played well and scored the goal. It helped to relieve it a bit. I like to show what I can do on and off the pitch. It makes me very proud to think that the likes of Capello, (Jose) Mourinho and (Luiz Felipe) Scolari have seen something in me to give me the captaincy. It's very special."
The Chelsea skipper, who has won 44 England caps, begins his second stint as captain in Wednesday's friendly against the Czech Republic at Wembley. The FIFA World Cup qualifiers begin in September with ties against Andorra and Croatia.