The Gunners take on Crystal Palace on Saturday, and Wenger believes the former Blackpool boss has 'exceptional talent' when it comes to managing a side.
Holloway leaves Palace second from bottom in the league with just three points from eight games, though Wenger believes dismissing the manager was harsh.
"I feel that it's very harsh on Ian Holloway because he has done exceptionally well with Crystal Palace to get them up to the Premier League," said Wenger on Arsenal.com. "It's very difficult to do that and I find it very quick and very early to separate from Ian Holloway.
"For me, he has exceptional talent to manage a football team."
The Arsenal manager - who will be looking to defeat Holloway's former club at Selhurst Park - also believes that the 50-year-old has something special about him.
"He is a football man. He has something that belongs to him that he is special but you feel there is a strength in there that can take people on board with him.
"When you go through defeat after defeat when you want absolutely everything to win, it can drain you down. That can happen to everybody and when you are a bit older you can maybe deal with it a little bit better.
"But what is the killer in our job is to lose a succession of games and when you lose five, six or seven on the trot that is difficult to swallow."
Assistant manager Keith Millen will take charge of the Eagles for the visit of table-topping Arsenal, and Wenger will be glad that he doesn't have to face one of the candidates for the role.
Tony Pulis is many people's favourite for the role, and Arsenal experienced difficulties in competing with Pulis and his former Stoke side.
However, the Frenchman gave his backing to Pulis, praising the Welsman for the commitment he gets from his players.
"I heard that they wanted to go for a manager with experience,” he said. "Pulis is one of them and of course, if he gets there, he will certainly play his way and demand huge commitment. He has done well at Stoke in the way he wants to play the game and he has been very efficient.
"I believe you can only be a good manager if you play with your gut feeling and that can be different. But you can only be good if you're completely in accordance with the way you see the game."
Arsenal will be looking to bounce-back from their midweek Champions League defeat to Dortmund and continue their fine Premier League form.