Holland, who had five goals and five assists in 39 games last season, is expected to compete for the third-line centre job behind Tyler Bozak and Nazem Kadri.
The Leafs acquired Holland in November from the Anaheim Ducks along with Brad Staubitz for Jesse Blacker and second- and seventh-round picks. The trade happened when Toronto was so short on centres because of injuries and suspensions that James van Riemsdyk was moved there from left wing.
Holland, who was a restricted free agent, has 17 points in 68 career NHL games for the Leafs and Ducks. He was a first-round pick at 15th overall in the 2009 draft.
On his Twitter account, the Caledon, Ont., native wrote: "Super excited to sign a new deal with my boyhood team!"