Holland will finalize the contract, which the source said was for two years and $5.2 million plus incentives, on Monday after the three-day rookie minicamp this weekend at Valley Ranch.
The Cowboys acquired Holland from the Denver Broncos in a trade on August 28, 2008.
Holland played in six games in the 2008 season, earning two starts.
However, last season, he was inactive the entire season and there was some doubt if he would return to the team.
But the Cowboys, in a quest to improve their depth on the offensive line, have decided to retain Holland.