An official announcement will come later this week, a source told the paper.
Holmstrom scored 11 goals and had 24 points last season. His most productive season was 2005-06, when he had 59 points (29 goals, 30 assists).
"He never played a lot of minutes like some guys; he scrapped for his ice time," former coach Scotty Bowman said, according to the Detroit Free Press. "That's the thing I like the best about him; he never complained. He was a terrific player because he accepted his role. That's why he's going to go down as such a solid player. He's had a great career."
Holmstrom will turn 40 on Jan. 23. He was taken in the last round of the 1994 draft and has played in 1,026 games for Detroit.
Craig Custance covers the NHL for ESPN The Magazine.