Zetterberg, 37, had been holding out hope that he would be able to play again. Last month, he described a deteriorating condition that included nerve pain in his legs and disk-related issues.
Holland said Zetterberg will be placed on long-term injured reserve.
Zetterberg has three years remaining on his contract, with an annual cap hit of $6.083 million. Since he is being placed on long-term injury reserve, the Red Wings will get significant cap relief.
Zetterberg had played in all 82 games over each of the past three seasons. He had 11 goals and 45 assists in 2017-18 as the Red Wings missed the playoffs for the second straight year.
The two-time All-Star took home the Conn Smythe Trophy in 2008 as Detroit won the Stanley Cup. In 2015, he was honored with the King Clancy Memorial Trophy, which recognizes a player’s leadership and humanitarian efforts.