The 33-year-old passed his physical Tuesday and has been assigned to Double-A Harrisburg, according to Todd Dybas of NBC Sports Washington.
This will mark Holland's second stint in the Nationals organization. He inked a deal with Washington last August after he was cut by the St. Louis Cardinals, and after posting a 7.92 ERA and 2.24 WHIP in 32 outings with St. Louis, he recorded three saves to go along with a 0.84 ERA and 0.89 WHIP in 24 appearances for the Nats.
However, Holland's struggles returned this year, as he put up a 4.54 ERA in 40 appearances for the D-Backs.
Washington's relievers own a 6.02 ERA, which is the worst mark in the National League, and though closer Sean Doolittle earned the save on Monday, he entered the day with a 7.71 ERA in August.
Holland owns a career 2.96 ERA with 206 saves in 459 innings with five teams. A three-time All-Star, he led the NL with 41 saves in 2017 and won the Mariano Rivera Award as the American League Reliever of the Year in 2014.