The Ivory Coast winger is being tipped for a big money move in January or the summer.
And Holloway believes that Zaha has all the qualities to make the step up and excel for a Champions League club.
"I think he would be fantastic over there [at Chelsea ]," Holloway told talkSPORT.
"I don't want Palace to lose him, but in reality he is going to have to go.
"I would love to see him in that sort of team.
"I don't want to upset them [Palace fans], but I am only looking and I think he is improving all the time. I see that end product from him, and I just love him.
"He is one of my favourite players ever because I've never seen anyone do what he can do."
The 27-year-old has two goals and an assist in 15 Premier League appearances this term.