The Chelsea footballer is accused of a racially aggravated public order offence after allegedly calling QPR player Anton Ferdinand "a "f**king black c**t" during a premiership match last October.
Prosector Duncan Penny told the court today that Terry's slur was "most probably in response to physical gestures being made by Mr Ferdinand" relating to his 2009 fling with Vanessa Perroncel, the ex-girlfriend of his former Chelsea and England teammate Wayne Bridge.
Terry has claimed that he only uttered the offensive words to get confirmation from Ferdinand that he hadn't used them during their exchange.
"The Crown's case is that the words were abusive and insulting in a straightforward sense and that the term 'f**king black c***' was uttered as an abusive insult demonstrating hostility based on Mr Ferdinand's membership of a racial group," The Daily Telegraph quotes Penny as saying.
"They were uttered by the defendant in response to goading by Mr Ferdinand on the issue of his extra-marital affair, rather than by way of exaggerated and instant querying of a perceived false allegation."
[Anton Ferdinand (left); Rio Ferdinand (right)]
Ferdinand told the court that the pair had been trading insults during the game in question, when he asked Terry: "'How can you call me a c***? You shagged your teammate's missus, you're a c***'."
Ferdinand also admitted to suggestions that he was "trying to get a rise out of Mr Terry".
It was revealed that the 27-year-old did not think he had been racially abused by Terry during the game or its immediate aftermath, but became convinced after his girlfriend showed him a video of the incident.
"When someone calls you a c***, that is one thing but when they bring your colour into it, it takes it to another level and it's very hurtful," he said.
The trial continues.