The 36-year-old joined Steve Bruce's side in the second tier this summer after calling time on his 22-year stint with Premier League champions Chelsea.
McCarthy - the longest-serving manager in the division - has cautioned the veteran defender to expect a much rougher ride in the Championship, where teams play 46 games per season, and has predicted that opposing players will be keen to "show him up".
"John adds an extra element. We'll all be watching closely to see if he's a success or falls on his backside. Either is a story," McCarthy told the Daily Mail.
"I hope for his sake he's not under any illusions what the Championship is. There will be no grace and favours because every striker will want to show him up at 36.
"I hope my players aren't thinking, 'Ooh, that's John Terry'. When I started out at Barnsley and came up against a Premier League player, that was reason in itself to start a war.
"But John has to be a right shrewdie at football with all he's done. He is probably relishing the challenge and if he's physically right, he'll be hard to beat because he's a bloody good defender."
During his time with the Blues, Terry won five Premier League titles, five FA Cups, three League Cups, the Champions League and the Europa League.