Steven Gerrard and Rio Ferdinand captained England in Capello's first two matches in charge - but Terry was the regular skipper under previous head coach Steve McClaren.
Capello believes the captaincy will boost Terry after he missed a crucial penalty in Chelsea's Champions League final defeat to Manchester United six days ago.
He said: "It is a good decision for John Terry after last Wednesday, which was not nice for him.
"He has played very well in training and when I told him he would be captain he was very, very happy.
"As a captain I think it is important to be a leader, and John Terry is a leader."




