Holley embarked upon his military career in the Occupation of the Araucanía in the Arauco War. At the start of the War of the Pacific, he was commissioned as second in command of the regiment Esmeralda when it was created after the division of the older Carampangue in May 1879. Serving in this position, Holley fought in the Battle of Tacna. He was promoted to commander of the regiment when its prior commander, Santiago Amengual, was named chief of the First Division in the Lima Campaign. Holley fought in the Battle of Chorrillos (Battle of San Juan) and the Battle of Miraflores, where his regiment suffered heavy losses. After the capture of Lima and the Chilean occupation of Lima, he remained in Peru with the Esmeralda regiment, taking part in the Breña Campaign (Campaign of the Sierra).