Holland, 46, will combine his duties as assistant first-team coach at Chelsea with his England role until the end of the season, before linking up with the FA on a full-time basis.
"I am delighted to have Steve as my assistant manager," Southgate said in a statement yesterday.
"We have worked very closely for three years and I have the utmost respect for the way he works, his professionalism and the detail of his preparation."
Southgate added Holland to his coaching staff when he was in charge of England's Under-21s in 2013. He thanked Chelsea for agreeing to let Holland leave.