The 28-year-old made his Munster debut in 2007 against Llanelli Scarlets, and the academy graduate made his Heineken Cup debut against Northampton Saints in April 2010.
Holland has won 83 caps for Munster and has established himself as an important squad member, playing both second row and back row. Billy featured in every single PRO12 game last season and has played ten games so far this season as he continues with his consistent form.
Commenting on the news Billy said "I'm delighted to have signed on for another two years. With such a young and exciting squad the future is bright here at Munster and I'm glad to remain involved. Having worked so hard to get where I am, I am keener than ever to push on and challenge for starting spots."
In further squad news Ian Nagle joined English Premiership side Newcastle Falcons today on a three month loan basis.
In making the move the Buttevant man joins his former Munster colleague and fellow academy graduate Danny Barnes who signed with Falcons last summer.
The arrangement provides the 25 year-old lock with the opportunity to challenge for competitive first team rugby on a consistent basis. With 29 caps for Munster, Ian has only featured on 3 occasions this season, with his last outing against Scarlets in December.
Head Coach Rob Penney said, "Newcastle, who are currently struck with injuries, made contact with a request and we were happy to accommodate them with a short-term loan. Ian departs with our best wishes and we believe it will be a beneficial experience for him."