NFL Network reports the deal is worth $1 million guaranteed and includes incentives that could push the total value to $3 million.
Holmes, 27, saw his production diminish, going from 47 catches for 693 yards (14.7 average) in 2014 to 14 catches for 201 yards (14.4 yards) last season.
Holmes played in 16 games for the second consecutive season and caught four touchdown passes again, but he started only once last season.
He made himself valuable on special teams in 2015 with seven special-teams tackles (five solo) and a forced fumble.
ESPN Raiders reporter Paul Gutierrez contributed to this report.