The 31-year-old is being tried over comments that he is alleged to have made last October during the Blues' 1-0 defeat at Loftus Road, a charge which he denies.
“You're not a racist, are you? But you used racist language because you snapped and it was instinctive. You were fed up with people abusing you over the issue with your wife,” a prosecutor levelled at the centre-back when he took the stand.
But Terry argued: “It was almost two years on and I had heard it a million times before. If I was going to snap, I would have snapped long before.”
The Chelsea man insisted that he had been repeating the alleged insult in incredulity as he had thought that Ferdinand had been accusing him of racial abuse, and agreed with the suggestion that he had been “stitched up right and proper” by the allegations.
Terry’s defence had previously moved to have the case thrown out, but the magistrate ruled otherwise.
Earlier on Tuesday, the court heard an interview which was recorded a week after the match between the former England skipper and FA investigator Jennifer Kennedy.
"I have been called a lot of things in my football career on and off the pitch, but being called a racist I am not prepared to take," Terry had said on tape.
"That's why I came out and made my statement immediately.
"I am not having Anton thinking that about me or anyone else. That's not my character at all."
The decision to prosecute Terry came about because the police received a complaint from an off-duty police officer watching the west London derby match on television.
Ferdinand has told the court he had not originally believed Terry had said anything racially abusive, but that his girlfriend showed him a video uploaded onto YouTube of the Chelsea defender mid-game which changed his mind.
Terry denies any guilt of the summary offence, but if convicted would face a maximum punishment of a £2,500 fine.
The trial continues, with the centre-back set to return to the witness stand on Wednesday.