Capello sprang a surprise when he opted to give Terry a second chance as skipper ahead of Rio Ferdinand, who had been widely regarded as favourite for the job. But the England coach made it clear the captain won't get any special treatment as he warned the Chelsea defender he would have no qualms about dropping him if his form slipped.
It is a message intended to keep Terry and, just as importantly, his team-mates, on their toes. If the captain isn't irreplaceable then the rest of the squad can clearly be discarded as well.
"For me it is important to be captain but it is important what moment the players are in," Capello said. "He will not be sure to play. The first eleven will be the best players for me, not because they are the captain. We have a vice captain, Rio Ferdinand."
Capello has always run his teams on this kind of dictatorial basis. The former AC Milan and Real Madrid manager knows he is the one who will take the majority of the criticism if England fail to deliver, so he is determined to do everything exactly how he wants.
"Sometimes in my career I spoke with the captain but usually I decide," he said. "I prefer that I decide everything. Always I speak with my staff and ask different questions. But the last decision is mine.
"I think it is very important to know a lot of players as captains. You have to know the players and then I choose from this. Not because someone told me this player is good, but because I made the decision."
Capello has often retained the captains who were already in position in his previous jobs - Raul at Real Madrid, Francesco Totti at Roma and Franco Baresi at AC Milan all got his seal of approval - so it was perhaps not surprising that he stuck with Terry.
But Capello could face a challenge to keep Ferdinand motivated after the Manchester United defender was snubbed at the last minute. Even Terry thought his central defensive partner was going to get the job and he admitted Ferdinand was likely to be devastated to miss out after such a lengthy audition.
"I would have been really disappointed and I'm sure the players who didn't get it feel the same way," Terry said. "It's been announced now and we can move forward. I was standing next to Rio and the first thing he did was shake my hand, which is great and shows what kind of man and character he is.
"You hear little whispers and with the form that Rio has been in and what Man United have achieved I did think he would get it. Rio has been in great form for Manchester United in the last couple of years. What he has achieved has been an example. We can all learn from that and it's great that I beat players like that to the job."
Terry has established a hugely commanding position in the Chelsea dressing room after so much success as the Stamford Bridge skipper. He played a major role in Chelsea's resurgence last season when Avram Grant was struggling to keep the team together. But he is well aware his influence with England will be far more limited.
"The manager said he takes control of all the tactics and all those big decisions and it's my job to keep the players moving forward," he said. "When things are going smoothly it's easy to run, but when you have a defeat or people aren't playing it's my responsibility to keep these players happy and keep things moving forward."