Sportsmail exclusively revealed on Thursday that the central defender had damaged his cruciate in the 2-2 draw at Manchester United on Wednesday.
Arsenal have now confirmed the injury, with Holding to miss up to nine months.
Holding’s injury could see Arsenal enter the transfer market for a replacement, particularly given Unai Emery has switched to a back-three in recent weeks.
Arsenal are also after a new forward in January with Danny Welbeck likely to miss the rest of the season.
The news comes at a time when Holding was emerging as a serious candidate to break into Gareth Southgate’s England squad.
The Arsenal defender had moved firmly onto Southgate’s radar in recent weeks following a string of excellent displays in Emery side’s 20 match unbeaten run.
But the serious knee injury sustained by the central defender in the 2-2 draw at Manchester United on Wednesday has dealt a huge blow to Holding’s international hopes. England medics will ask to be kept updated on Holding’s recovery. England’s next fixtures are in March when they kick off their Euro 2020 qualifying campaign against the Czech Republic and Montenegro.
Wolves midfielder Morgan Gibbs-White, who made his full Premier League debut in Wednesday’s win over Chelsea, in Wednesday is also firmly in Southgate’s thoughts ahead of the next year’s games.
England are also watching Brighton attacker Solly March, who has three caps for the Under-21s.