The 25-year-old American joined Wanderers in January from Houston Dynamo and has now committed his future to the club.
He told the club's official website: "I'm really excited because I love being at the club. I couldn't ask to be around better fans, management staff and players.
"I was given an opportunity by the manager (Owen Coyle) to show that I can play at this level and I'm extremely grateful for that. The confidence that he has shown in me has really allowed me to push on."
Holden has started each of Bolton's six Premier League games this season after being limited to just one league start last term following his arrival at the start of the year.
"I had a bit of a setback with the injury last season, but that made me more determined to make an impact when I came back for pre-season," he said.
"I've had a good start to this campaign and I'm looking forward to continuing playing and helping Bolton as much as I possibly can."