The Blues boss believes the England captain did not racially abuse Anton Ferdinand during their weekend clash with QPR, labelling him as "a player of great responsibilities"
The Blues captain has already issued a statement denying racially abusing the former Sunderland defender during his side's 1-0 loss against QPR on Sunday at Loftus Road.
Ferdinand has so far failed to back the England captain's claims and the police have confirmed they are currently looking into an anonymous accusation made against Terry.
However Villas-Boas has thrown his weight behind his skipper, claiming that the incident is nothing more than a big misunderstanding.
"We fully back John," Villas-Boas told reporters. "He spoke to Anton after the game.
"For us it was end of story. It's just a big misunderstanding and something blown out of proportion."
"John is a player who [represents] this country to the highest level internationally. He is a player of great responsibilities.
"I find it strange when people don't trust the words of a representative from your country.
"The clubs are in touch with each other and for us the matter is over. We have full backing for our player and for us it is the end of story.
"The rest we have to wait and see."