A Premier League draw at Ewood Park left the Blues four points behind Manchester United and two behind Arsenal with a game in hand. But it seemed as though their chances of winning the league title had vanished.
However, Chelsea rallied following an "open and honest" team meeting with management and the Blues have been unbeaten ever since.
The get-together sparked a fabulous turnaround in their fortunes and has left them on course to become only the seventh club to win the double.
They put five past Portsmouth, scored seven against Villa, beat United at Old Trafford and on Saturday clinched a place in the FA Cup final for the third time in four years with a 3-0 victory over Villa at Wembley.
"A few weeks ago it didn't look as though we were in the running for anything really so we have turned it round," said Terry.
"We were obviously disappointed going out of the Champions League and our focus was no longer on that, it was on the league. We went to Blackburn hoping we could win and go to the top but we didn't.
"We didn't really show the fight and on the day Blackburn wanted it more than us. That was not acceptable. We had a little get-together, nothing too much, but since then we have been playing well and scoring lots of goals.
"We have got some big characters here, me, Lamps (Frank Lampard), Bally (Michael Ballack) and Petr Cech, those kind of players are worth their weight in gold at a bad time. Everyone spoke their mind, we got off our chests what we were feeling, and went again. It was as simple as that.
"I don't want to make a big thing of it. We had the discussion between the management and players and everyone spoke honestly. It was a chance for everyone to get things off their chest. It is important players speak their mind.
"After a game everyone has to look at themselves and their own performance. Then we go in on the Monday or whenever it may be and the manager assesses the team as a whole. We know as a group of players when we do make mistakes. We have got big characters around and we get up and back on the horse and go again."
Terry's own form has also come into question during a season when he was stripped of the England captaincy by coach Fabio Capello following lurid revelations over his relationship with Vanessa Perroncel, former girlfriend of his one-time Stamford Bridge team-mate Wayne Bridge.
At the height of those off-the-field headlines, Terry made two crucial mistakes that allowed Everton to beat Chelsea at Goodison Park.
But the England defender insists that he was big enough to own up to his gaffes and says not many other players publicly take the blame these days.
"You don't see many players these days coming out and speaking as honestly as I did when I made the mistakes at Everton," added Terry.
"I am my own worst critic. When I have a bad game, like I did at Everton, I came out publicly and said the two goals were my fault. But I didn't really see myself as playing badly, individually, but as a team we were not playing well. But the lads have stuck together, in a tough time, and we have come out the other end. Now we are in the cup final and top of the league."
Now Terry's eyes are on the double but he knows that their destiny now lies with their own form.
"Where we are in the league at the moment means it is down to us," he said. "We have got ourselves in the FA Cup final which is a one-off game that anyone can win and will be a tough one.
"But in the league we have got some tough games. We have got Bolton at home and they are always difficult, so every fixture is tough. But if we keep working like we did in the second half and have done in the last four or five weeks, there is every chance. It is in our hands."