The team announced the moves Monday, when Webster tweeted a thank-you to Wizards owner Ted Leonsis "for giving me another chance in this league."
Webster averaged 9.3 points and 3.0 rebounds in 186 games, including 75 starts, with the Wizards. Washington signed him as a free agent before the 2012-13 season.
He had an operation to repair the labrum and damaged cartilage in his right hip on Nov. 20.
A first-round draft pick in 2005, Webster has averaged 8.7 points and 3.1 rebounds for his career. He turns 29 on Friday.
The 7-foot Hollins, 31, is averaging 3.7 points and 2.2 rebounds in a nine-year NBA career. Washington is his eighth team.