The former Aston Villa assistant manager was linked with the Championship club after last week's dismissal of Gary Rowett.
However, Terry has announced he's not planning to apply for the Oxford post.
"Good morning, just on the golf course," he said in a video posted to TikTok. "I'm not sure where these rumours have come from, I'm certainly not on the lookout for a job.
"I've spoken about how much I love my role at Chelsea in the academy, working with the players in progressing them from the youth team, to reserves, to the first team, and the involvement I have in that.
"I've certainly not approached Oxford, not spoken to anybody at all, so I just want to completely rule myself out of it.
"I wish Oxford and whoever goes in as manager all the very best, but it certainly won't be me. Up the Chels."