Holahan was raised in Connecticut. After graduating from Yale in 1965, Holahan served as an officer (Lieutenant, J.G.) in the United States Navy on an amphibious assault ship in Vietnam from 1967 to 1969. He was awarded the Vietnam Service Medal with a silver star for five campaigns, a National Defense Service Medal, a Meritorious Unit Commendation, the Republic of Vietnam Meritorious Unit Citation, and the Republic of Vietnam Campaign Medal.

Holahan graduated from Hastings College of Law in 1973. At Hastings he was the recipient of the Hale Moot Court Prize for Best Brief, was an editor of the Hastings Law News, 1972–1973, and a founder of the Hastings Child Care Center. After Hastings he worked for a litigation firm in the financial district in San Francisco for two years.

From 1976 to 1992, he took a hiatus from his law practice to pursue a successful career as an actor in films and television. Holahan is best known for appearing with Al Pacino in the crime film Scarface as Jerry the Banker. Notable other roles included Collision Course, Kuffs, Haywire (mini-series) and Aspen Extreme, as well as television appearances in M*A*S*H, Hill Street Blues, Lou Grant and The Rockford Files. He also appeared in the movie The Vegas Strip War in 1984 playing Jimmy Weldstrom. He played a lawyer in his 1981 appearance on The White Shadow. His character interviewed James Hayward (Thomas Carter) for a summer job.

In 1992 Holahan went back to the legal career he had put on hold in 1976. He started the Law Office of Dennis Holahan, which was based in Los Angeles and specialized in entertainment law, winning several high profile cases.