Terry, 35, on Sunday announced he will leave the Londoners in June having spent the past 18 years at Stamford Bridge.
Chelsea later released a statement saying they were open to retaining the defender provided interim boss Guus Hiddink's successor supports the move.
"This is a story that has not finished," Desailly told the Daily Express.
"The club are saying that they are still negotiating.
"I think they will probably renew. There is more talking to be done."
French legend Desailly joined the Blues in 1998, the season Terry made his debut for the senior squad.
Terry is Chelsea's most successful skipper, leading the side to four Premier League titles, five FA Cups, three League Cups, a Champions League and an Europa League crown.
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