The 17-year-old midfielder has moved to Cardiff’s Under-21 side after being given permission to train with the Welsh club.
Holt made 12 appearances for Manchester City’s Under-18s but did not make a senior appearance before leaving the Premier League champions.
The England Under-15 international said he was excited by the opportunity to begin a new challenge in Cardiff.
“I’m very pleased to be here. It’s a great opportunity and a different challenge for me,” Holt said.
“It’s a brilliant environment to be in and I can’t wait to get started.”
Holt also outlined the qualities he believes he can bring to his new club, describing himself as an energetic midfielder who is comfortable with the ball.
“I’d say I’m an energetic player with technical ability on the ball,” he said. “Hopefully, I can chip in with a few goals as well.”
Cardiff had the opportunity to assess Holt after he was allowed to train with the club, with his performances convincing manager Brian Barry-Murphy that the teenager was worth bringing into the Under-21 setup.
“The opportunities that you can get here at Cardiff are clear to see,” Holt said. “It’s a great place to be.”
His departure comes at a difficult moment for Manchester City, with the club appealing an independent commission ruling that found them guilty of breaching Premier League financial rules.
City have denied wrongdoing and launched an appeal against the findings, but Holt’s move represents the first reported departure of a player from the club following the ruling.
Holt’s decision is not being presented as a direct response to the verdict, with the teenager instead moving to a club where he has a clearer pathway to regular football and further development.
His immediate objective will be to establish himself with Cardiff’s Under-21s before attempting to progress towards senior football.
For a player who had impressed at youth level but had yet to make the step into Pep Guardiola’s first team, the move provides a fresh opportunity to continue his development away from the competition for places at Manchester City.