Holden, 25, suffered the setback on Saturday when he was hurt in a challenge with Manchester United's Jonny Evans in the 1-0 defeat at Old Trafford, which saw the defender sent off.
It means the United States international will take no further part in the season, including the FA Cup semi-final against Stoke at Wembley on April 17.
Holden had 26 stitches inserted in the gash on his knee following the Evans challenge, although manager Owen Coyle refused to condemn the United defender immediately after the game. Coyle is now focused on nursing the Aberdeen-born player back to full fitness.
He said: "First and foremost our main concern is Stuart and his recovery. He will get all the time and support he needs.
"Stuart has been outstanding this season and has shown he is one of the best midfielders in the Barclays Premier League. He has such desire, strength of character and a winning mentality and he will draw on those attributes in his rehabilitation."