The drama pilot, based on DC Comics' Green Arrow character, will star Stephen Amell as the eponymous hero.
Holland will play wild party girl Thea Queen, the sister of billionaire and secret superhero Oliver Queen (Amell), according to Deadline.
The actress is best known for playing Kaitlin Cooper on The O.C. from 2006 to 2007 and has also appeared on Gossip Girl.
Fellow Gossip Girl star Katie Cassidy will also appear in Arrow as Dinah 'Laurel' Lance, who features in the original comics as the superhero Black Canary.
NCIS actress Susanna Thompson will play Oliver and Thea's mother, while Dexter's David Ramsey has been cast as bodyguard John Diggle.
Arrow will be produced by Warner Bros TV, with Game of Thrones director David Nutter hired to helm the pilot.
> Arrow: CW pilot will be 'sophisticated, edgy' says network exec