Holzer will make US$725,000 next season and $850,000 in 2014-15.
The 25-year-old Holzer has appeared in 16 games with Toronto this season, registering two goals and 19 penalty minutes. The six-foot-three, 205-pound Holzer is tied for third on the team in blocked shots with 37.
A native of Munich, Holzer has represented Germany internationally, including at the 2010 Olympic Winter Games in Vancouver.
Toronto selected Holzer in the fourth round, 111th overall, in the 2006 NHL entry draft.