Terry returned to the Blues academy for a consultant role in July following his stint as the assistant manager at Leicester City.
Recent reports linked the legendary defender with a managerial role at Al-Shabab, but he has rejected that opportunity for the director role.
Terry’s appointment comes after the Saudi Ministry of Sport’s approval for Muhammad Al-Munjam to become Al-Shabab’s president.
Al-Munjam shares a great relationship with the former English international and has convinced him to take up a position at Al-Leith.
Terry will follow in the footsteps of his compatriot and former teammate Steven Gerrard, who is currently serving as the manager of Al-Ettifaq.
The 42-year-old will work with struggling Al-Shabab across recruitment and strategy, and his primary task will be finding a new manager for the Riyadh-based outfit.
The deal will allow Terry to continue his day-to-day activities in the United Kingdom.
Al-Shabab, currently managed by caretaker boss Juan Brown, are 11th in the Saudi Pro League table, recording only two wins in seven games while suffering two draws and three defeats.
The Riyadh-based outfit recruited Yannick Carrasco and loanee Romain Saiss in the summer transfer window.
Terry has opted for a role behind the scenes due to the short-term contract offered by the Saudi giants.
He also worked as an assistant to Dean Smith at Aston Villa between 2018 and 2021.
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