After Virginia seceded from the Union in early 1861, Terry raised a company of cavalry in Bedford County, which became the 2nd Virginia Cavalry. His performance as captain at the First Battle of Manassas garnered attention, praise, and a promotion in September to colonel of the 24th Virginia Infantry, replacing Jubal A. Early, who had been promoted to brigade command.[11]
Leading a charge at the Battle of Williamsburg during the Peninsula Campaign, Terry suffered the worst of his several combat wounds during the Civil War. He was shot in the face and never fully recovered. He missed the Seven Days Battles, but returned to duty for the Northern Virginia Campaign in August. Later that year, he assumed temporary command of Kemper's Brigade of infantry in the Army of Northern Virginia before returning to his regimental command. Terry was wounded during Pickett's Charge at the Battle of Gettysburg, and later assumed command of the severely wounded James Kemper's brigade. Pickett's rebuilt division was assigned later that year to duty in North Carolina, where it participated in the attacks on New Bern.
On May 31, 1864, Terry was promoted to brigadier general and led his depleted troops during the Battle of Cold Harbor and throughout the Siege of Petersburg. He suffered his seventh battle wound on March 31, 1865, at the Battle of Dinwiddie Court House.[12]