Holland, 26, won the Austrian Bundesliga title in 2012-13 and appeared in the UEFA Champions League during a three-year stay at Die Veilchen.
Promoted from 3. Liga after finishing second last season, MSV's ambitions are considerably less lofty, something the newcomer made no secret of upon his arrival.
"I'm delighted to be here," Holland told the club's website.
"We are happy to sign James who is a player who is still very young but already has a lot of experience," MSV coach Gino Lettieri said.
"He took a leading role at Austria Wien and that’s a positive sign. We are convinced he brings much to the team."
Holland, an A-League title-winner with the Newcastle Jets in 2007-08, has 15 caps for the Socceroos and was picked in the 2014 FIFA World Cup squad, but hasn't played for the national team since a 0-0 friendly draw with the United Arab Emirates last October.
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