"After 23 incredible years as a footballer, I have decided that now is the right time to retire from playing", Terry wrote on Instagram.
The former England captain said he needed some time to mull over his next move after opting to leave Villa after just one season at the club.
Here is Terry's career in pictures.
"What a player, what a leader, what a career".
In terms of Henry's current role as assistant coach of the Belgium national team, it is understood that the FA will not stand in the 41-year-old's way if he made a decision to take Villa up on their offer.
"Right from the outset they have given me total support, on and off the pitch, and I have a tremendous bond with them".
The Birmingham-based side were looking to have the ex-England worldwide return as a player, while Spartak Moscow were after him as well, but Terry has since chose to close that chapter of his life as he looks towards the future.
"We achieved so many great memories together and I couldn't have succeeded without you".
"So yeah, you can't rule me out because I have never been asked".
"It was a privilege to represent such a renowned football club with great fans. I look forward to the next chapter in my life and the challenges ahead".
Aston Villa failed to regain promotion to the Premier League after suffering defeat to Fulham in the play-off final and Terry ended his union with the club after his 1-year contract expired.
Henry's former Arsenal team-mate also feels bringing in Terry could be a smart move as the former Blue will be more aware of the surroundings at Villa Park than the Frenchman.