The USA international, 27, will remain at Hillsborough until April 24 in search of further game time having made three appearances for Wanderers since returning from a knee injury nightmare spanning almost two years.
Holden is out of contract at the Reebok Stadium this summer but Freedman insists he is part of his long-term plans.
"This is an opportunity for Stuart to go out and get games," he told Bolton's official website. "Sheffield Wednesday are a big club and he'll be working with a good manager in Dave Jones.
"This is the next step in his rehabilitation process and he'll come back to us match fit. This is the best move for Stuart and is a win-win-win situation for everyone involved.
"We had a good chat earlier in the week. I informed him that we want him with us next season and have offered him a contract extension."
- Sports & Recreation