Holloman, 23, received a second opinion that confirmed he can't play in the NFL anymore, the source said. He will seek a third opinion just to see if there's a chance he could play.
Holloman missed seven games as a rookie with a bruised spinal cord but was able to return and start the final two games, posting a career-high 11 tackles and two sacks in the season finale against the Philadelphia Eagles.
In the offseason, Holloman took part in several offseason workouts and noted he almost had to learn how to tackle again.
Coach Jason Garrett said the neck had been bothering Holloman the last few weeks, and he was unable to finish last week's preseason game against the Baltimore Ravens.
"I don't want to get into anything medical about it," Garrett said. "I don't know that much about it, and there's a lot of very specific things regarding that. But it has to do with his neck and he had that injury last year and he dealt with it again this year. It's a very challenging, difficult thing for a young man who has dreams of being an NFL football player, achieves those dreams.
"I told him this morning, 'You're a 10-year player in my mind. You're going to play for a long, long time.' Just has everything that you want. Took advantage of his opportunity here last year whenever we gave it to him. And he has physical ability, he's tough, he's got instincts and feel for the game. But this becomes an easy decision for him and for his family when you're dealing with that kind of injury."
The Cowboys selected Holloman in the sixth round of the 2013 draft. When Sean Lee was lost for the season because of a knee injury in May, Holloman was viewed as one of his potential replacements.