The England captain glanced home a Frank Lampard free-kick through a melee of players to win the game and strike a major blow to United's title ambitions.
The match was a dour affair with tensions high and both goalkeepers in fine form.
Chelsea had the first attack on goal, a left- footed drive by Branislav Ivanovic on two minutes, which Edwin van der Sar collected safely.
United had a good call for a penalty on 14 minutes when Antonio Valencia got more than a shoulder charge from Terry, but referee Martin Atkinson ignored the appeals.
A free header on 18 minutes saw Didier Drogba slice the ball wide of van der Sar's goal with the goal beckoning.
When United attacked, Valencia tried his luck with a 20-yard effort, but the shot sailed over Petr Cech's crossbar.
A snap-shot by Nicolas Anelka on 26 minutes almost foxed United's defence but van der Sar was alive to the threat and the 20-yard shot was snuffed out expertly.
Michael Carrick emulated Anelka with his long-range effort five minutes later and Cech was again equal to the task.
Anelka clearly had his shooting boot on, as he forced van der Sar to make another fine save on 30 minutes.
Drogba had the first effort of the second half, a somewhat limp right-footed shot that was hopelessly wide.
Lampard was at least on target with his effort on 61 minutes, but it lacked any sort of power and failed trouble the United goalkeeper.
Joe Cole, celebrating his 28th birthday, was finally introduced to the game on 63 minutes at the expense of ineffective Deco.
Wayne Rooney fired in a shot on 67 minutes, sending a rasping daisy-cutter just wide of Cech's goal from outside Chelsea's penalty area.
Just 60 seconds later, the England man produced the shot of the game, sending a wonderful right-footed curler, on target. Cech dived to his left and parried the ball spectacularly away for a corner.
But it took captain Terry's header from Lampard's free-kick on 76 minutes to score what proved to be the winner.
Terry was first to the ball from Lampard's whipped left-wing cross and the ball sped past the hapless van der Sar from six yards out.
Michael Owen entered the fray with five minutes remaining when he came on for Anderson, but the former England striker never got close to equalising and Chelsea saw out the match to hold the advantage in what could be a very close title race.