Terry header defeats Red Devils
The eagerly-awaited showdown had been meandering towards a disappointing goalless draw until Terry was left unmarked to glance in a Frank Lampard free kick - with striker Nicolas Anelka claiming he got the final touch.
The victory took Chelsea to 30 points, five clear of Arsenal, who won 4-1 at Wolverhampton Wanderers on Saturday, and United, who also lost to Liverpool last month.
Tottenham Hotspur are fourth on 22 after they beat Sunderland 2-0 on Saturday. Liverpool host Birmingham City on Monday.
Earlier on Sunday, Hull City beat visitors Stoke City 2-1 with a stoppage-time goal, Everton won 2-1 at West Ham United while Wigan Athletic drew 1-1 at home to Fulham.
However, all eyes were on Stamford Bridge this weekend, even though for the most part the big game failed to deliver. WEAKENED DEFENCE
United were without first-choice centre-halves Rio Ferdinand and Nemanja Vidic but stand-ins Wes Brown and Jonny Evans were barely tested in a game high on errors and short on goalmouth action. Chelsea's defence was similarly comfortable, despite the willing running of United striker Wayne Rooney, and the first hour passed without either goalkeeper seriously troubled.
Peter Cech stretched to keep out a Rooney curler after 68 minutes as United applied some pressure but it remained tight.
The absence of Ferdinand and Vidic proved key, however, eight minutes later when United's defence got hopelessly confused defending a straightforward Lampard free kick from the left.
Terry reached it first but Anelka and his strike partner Didier Drogba were also in the vicinity - unlike any United defenders.
The champions upped the tempo after that but, with forward Dimitar Berbatov also absent through injury, too much fell on Rooney's shoulders and the Chelsea defence was able to crowd him out. TERRY'S DELIGHT
Terry, whose day began with some unwelcome tabloid headlines about his family, was delighted.
"I want it (the goal) because I've never scored against Manchester United home or away, but Nicolas was brilliant today so he can have it," he told Sky Sports.
Chelsea manager Carlo Ancelotti added: "We did what we had to do. We beat a very good opponent, the best opponent, and we're five points clear but we know this is a very long (season). We have to maintain this gap."
United manager Alex Ferguson was left complaining about the free kick that led to the goal and claimed his defenders were impeded defending it.
"That goal shouldn't have been allowed," he said. "The referee's position to make the decision was absolutely ridiculous, he can't see anything.
"It was a bad decision, but there's nothing we can do about it. You lose faith in refereeing sometimes, that's the way the players are talking in there - it was a bad one.
"We have dominated the game and had great chances to win the match and that's our fault.
"We should be finishing it off and we have only ourselves to blame in that respect but we never got the break we needed. We did play well and were the far better team." NEWS: Chelsea open up five-point advantage