Holland posted a 10-9 record last season, which was his fifth for the Rangers.
"I am devastated by this injury," Holland said in a statement issued by the team. "It was a freak accident at home that resulted in a hard fall on my knee. As upsetting as this is, my goal is to begin rehab and get back on the mound as quickly as possible."
Holland had career highs in strikeouts (189) and innings pitched (213.0) last year.