The Britain's Got Talent judge will play Princess Fiona in the stage adaptation of the popular DreamWorks movie franchise.
TV presenter and ex-popstar Richard Blackwood has been cast as Donkey.
Speaking on Twitter about her latest project, Holden said: "It's true about me being Princess Fiona in Shrek! I'm so excited but best of all [my daughter] Lexi is telling everyone mama will be a Green Princess!"
Shrek The Musical opens at the Theatre Royal, Drury Lane in May 2011. Tickets go on sale on October 1.