The national team manager believes the Chelsea defender was humiliated during the 2-1 friendly win in Denmark last month when, with captain Rio Ferdinand and vicecaptain Steven Gerrard sidelined and stand-in skipper Frank Lampard substituted, the armband was passed to Gareth Barry.
Snubbed: John Terry
Capello now believes, in hindsight, that it was wrong to have overlooked Terry in Copenhagen given his 65 caps and the fact that he had been captain between 2006 until his fall from grace a year ago.
He had similarly been snubbed last March at Wembley in the 3-1 defeat of Egypt.
The Italian has checked with his FA bosses about his change of heart and has been told he can turn to Terry, with Ferdinand and Gerrard ruled out for the crucial Euro 2012 qualifier in Wales in 13 days' time.
Capello believes he will need a strong leader in the cauldron of Cardiff on March 26, and he has always considered Terry to be at the head of the list.
That opinion has never changed, despite Terry's public loss of authority over the Wayne Bridge affair last year, and his apparent attempt to challenge Capello's standing during the World Cup tournament.
Terry had been deeply hurt, and his pain was obvious after the Egypt friendly, when Wayne Rooney was given the armband as Gerrard was substituted.
The deposed captain said: 'I felt, "OK, I've been stripped of the captaincy, but don't take the p*** out of me".
'I think they would have given it to one of the stewards ahead of me.'
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Explore more:People: John Terry, Fabio Capello, Wayne Rooney, Rio Ferdinand, Gareth Barry, Frank Lampard, Steven Gerrard Places: Copenhagen, Cardiff, Egypt, Denmark, United Kingdom, Wales