The Frenchman, 44, spent six years at Stamford Bridge after joining in 1998 - the same year Terry made his debut for the club.
Desailly has now issued firm backing to his former protege and insists the FA has made a real mess of the situation.
Terry stood down from international duty on Sunday evening, just hours before the FA started the disciplinary hearing against the Chelsea man as he answers allegations that he racially abused QPR defender Anton Ferdinand during a Premier League game at Loftus Road last October.
The 31-year-old had already been found not guilty of the same offence at Westminster Magistrates Court two months ago, but the FA pursued its own charge which was the main cause of Terry's decision to quit.
And Desailly has fully backed Terry, telling France's Sport24:
"I'm disappointed for John since he is a quality player who knows the highest level.
"It is a complicated story. It's not just 'I no longer want to'. This is a larger problem with the Football Association
"It is also a way for him to protect himself. You must remember that at Chelsea, players past 30 years of age can only sign contracts for one year. At 31 years of age, John perhaps wants to protect his future as a footballer and try to get himself an extension of two years.
"
Desailly is also adamant that current England captain Gerrard is not capable of replacing Terry.
He added:
"The English team loses a lot. John is a leader. He is the captain, Steven Gerrard is not.
"Gerrard is a soloist, a great player but has no impact off the field. In the life of the group, the leader is John Terry."
Source: team_talk
