Carlo Ancelotti has described the FA verdict that John Terry racially abused Anton Ferdinand during a match in October as "unbelievable".
Terry, 31, was captain as Chelsea won the title and the FA Cup under Ancelotti's management, and the Italian - now in charge of Paris St Germain - leapt to his former player's defence.
Blues defender Terry was banned for four games and fined £220,000 after an FA panel found him guilty of racially abusing QPR's Ferdinand last week.
He had denied the charge, of which he had been cleared in a court case in the summer, and may appeal against the verdict.
At Westminster Magistrates' Court in July, he was found not guilty after the prosecution was unable to prove he had called Ferdinand a "f****** black c***'' as an insult. He claimed to have been repeating words he thought Ferdinand had accused him of saying.
Shortly before this month's FA hearing began, Terry announced his decision to retire from international football, saying the FA had made his position with the national team "untenable".
Ancelotti said: "It is unbelievable - John Terry doesn't deserve this. I cannot understand how the FA can make a different decision [after the court case]. I think that it is really strange."
He said he felt Terry "has a really fantastic relationship with everyone... I am sure he is not racist - 100%".
And he backed the defender's decision to give up on international football, saying: "I don't think he'll come back to play for England, and I think that is a good decision.
"It is a bad thing for England, for sure, because John Terry did a lot of things for the national team."
Meanwhile, Ancelotti did little to dampen speculation linking Chelsea defender Ashley Cole, who is in the last season of his contract at Stamford Bridge, with a possible move to Paris.
Cole wants a long-term Chelsea deal so he can finish his playing days in London - but the club do not offer deals of more than a year to players aged over 30, and the left-back is 31.
Ancelotti told ESPN STAR Sports that "a lot of players are linked with Paris St Germain in the market".
He added: "For this season, we have a very good squad - but next year, I don't know what is going on. Ashley Cole is the best left-back in the world at the moment."