Sportsmail revealed last week that Fabio Capello intends to reinstate Terry as skipper for the match at Millennium Stadium later this month, more than a year after stripping the Chelsea man of the duty.
Injuries to the men who replaced Terry following allegations about his private life has forced the Italian into a dramatic U-turn over the 30-year-old.
Read how Sportsmail broke the exclusive story of Fabio Capello's dramatic U-turn
Happy chappy: John Terry is set to be reinstated as England captain against Wales
Capello admitted yesterday that he planned to meet Rio Ferdinand to discuss the prospect of relieving the injured Manchester United defender of the captaincy he inherited in the wake of the Terry scandal.
And Ancelotti believes that the impending re-appointment will put a smile back on the face of his own skipper.
'I didn't say anything when the England team took away his armband,' Ancelotti said. 'Obviously, this is the decision of the national team and he will be happy about this.'
Despite the uproar at international level, Terry remained the leader of his club, helping them to a historic Double last season.
Rain on his parade: Injured Rio Ferdinand is said to be furious at having the armband taken away
Indeed, Ancelotti has repeatedly insisted he is not interested in what his players get up to off the field, something he has been forced to reiterate on numerous occasions when they have hit the headlines for the wrong reasons.
Making his point: Capello feels he has punished Terry enough
Asked if he felt Terry had learnt his lesson from last year's scandal, he said: 'I don't know. I'm not interested in this. I'm just interested in seeing him train well and play fantastic football at this moment. That's all.'
But Ancelotti had no doubt about Terry's credentials as captain at Stamford Bridge.
'He is a Chelsea man, he is a Chelsea player,' he said. 'He has fantastic experience, he has personality to be captain here.'
Branislav Ivanovic, who is set to partner Terry at the heart of Chelsea's defence in tomorrow night's Champions League clash with FC Copenhagen, was only slightly more forthcoming than his manager.
TheSerbia star said: 'I'm not in the English national team so I don't knowa lot about this. In football, when you're captain, you have to have the trust of your team-mates and have to have a lot of things to be a leader, a man, to make everything okay.'
Ivanovic, who moved to Stamford Bridge three years ago, added: 'When I arrived, John Terry was already the Chelsea captain.
'How he's doing with everyone, with all the club, he'll be the Chelsea captain until the end of his career.'
The news about Terry completely overshadowed Chelsea's press conference ahead of the Champions League last-16 second leg against Copenhagen.
The one big surprise came when Ancelotti revealed Fernando Torres was not a certain starter as he confirmed he was planning to rest players ahead of Sunday's crucial Barclays Premier League clash against Manchester City.
Copenhagen, who Chelsea lead 2-0 after the first leg, appear tailor-made for Torres finally to end the goal drought he has endured since his ?50million move from Liverpool, but Ancelotti said: 'Maybe he will have a rest.'
Tricky start: Torres has struggled at Chelsea in the early stages and is yet to score
There have been claims Torres is homesick but Ancelotti said: 'This is not true. He's happy to stay here. We're happy that he's here. He's working very well and doesn't have a problem.'
Ancelotti was also relaxed about his own future, amid rumours former Blues boss Jose Mourinho is eyeing up a return to England.
'I don't have problems with my future,' he said. 'I have another year of my contract and I want to stay here.'
But he was far from relaxed about suggestions Chelsea were guaranteed to progress to the Champions League quarter-finals, saying: 'We have to pay attention. Copenhagen are a good team with good organisation.'
In the Nic of time: Chelsea lead Copenhagen 2-0 after the first leg in Denmark thanks to Nicolas Anelka
That was certainly not the case three weeks ago when the Danish champions looked every inch a side playing their first competitive match since a three-month winter break.
Yet, despite the quality of the opposition, the win had a galvanising effect on a Chelsea team whose season was on the brink of unravelling but who have since beaten both Manchester United and Blackpool.
Admitting the Copenhagen victory was the 'turning point' of his side's stuttering season, Ancelotti said: 'Copenhagen was an important match to move on. It gave us confidence, optimism, not just the result.'
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Explore more:People: Rio Ferdinand, John Terry, Fabio Capello, Carlo Ancelotti, Fernando Torres, Jose Mourinho Places: Copenhagen, Liverpool, United Kingdom, Wales