The veteran centre half was being mentioned as a possible replacement for Gary Cahill, who is set to miss the FA Cup semi-final against Tottenham on Saturday due to illness.
But as Standard Sport reported on Friday morning, Conte is unlikely to do so because it would mean moving David Luiz from his favoured central position in the back three.
Conte said: "This is a semi-final and in this season I know we tried to have in every position two options - usually the player that plays and another player.
"I think the right position for John when we play with three central defenders is in the central position where David Luiz is playing.
"I have to make the best decision for the team tomorrow, but we will try a different solution."
Terry hasn't played for Chelsea in the League since November and admitted he wants to leave in order to get regular first team football.
The former England international has been flooded with tributes from people in the game for his 22-year career at the club and is also getting a number of offers from around the world.
Conte added: "No, I’m not surprised about this. I’m repeating I think in every press conference that John, in my first season, is very important because he’s helping me on the pitch, off the pitch. For us he’s a great captain.
"The problem is that John wants to play regularly and for this reason I think that we have to respect his decision.
"I was a footballer and I know when you arrive at this point in your career. Your mind and your body tell you continually, you feel you can continue but you want to play regularly, it’s right to continue.
"If you ask me 'is he a serious loss for next season?' yes I think so because I’m seeing what John is doing this season and I repeat for the changing room, for this moment of Chelsea, we are building the foundation, a player like John Terry is very important for us."